Finance
A growing equity mortgage (GEM) is structured so that:
AThe interest rate increases over time
BMonthly payments increase over time with the additional amount applied to principal, shortening the loan term✓ Correct
CEquity grows by appreciation only
DThe lender receives equity in the property upon default
Explanation
A growing equity mortgage (GEM) has increasing monthly payments, with the increases applied entirely to principal reduction. This builds equity faster and shortens the loan term significantly, often cutting a 30-year loan to 15-20 years.
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