Who benefits from a shared appreciation mortgage?
The shared appreciation mortgage has a fixed interest rate and a fixed term up to 30 years. You agree to forfeit a part of the home’s future market value in exchange for a lower rate of interest. This is the difference between what the home is worth presently and what it is worth will be a few years from now. Since real estate will appreciate over time, this is a boon for the lender more than the borrower. This is different from a typical home equity loans. Your interest rate is reduced based on how much of the future appreciation you give away. Choose which is the best for you, Mortgage vs Home Equity. For example, you might see the following from a lender: (Note: This is only an example. Rates and breaks may differ.) • 30-Year Fixed Rate Mortgage: 9.25% • SAM w/20% Appreciation: 8.75% • SAM w/30% Appreciation: 8.25% • SAM w/40% Appreciation: 7.75% • SAM w/50% Appreciation: 7.25% Any increase in the home’s value will be split with the lender in the case of a refinancing, pay off the l
