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How to Get a Shared Appreciation Mortgage (SAM)

What it is

A shared appreciation mortgage, also referred to as SAM, is a fixed rate mortgage at extremely low interest rates The shared appreciation mortgage was introduced in the 1980s during a period of high interest rates when mortgages were hard to obtain. Borrowers were given a low interest rate in exchange for sharing the property's increased future value with the lender. The shared appreciation mortgage means easier qualification and lower monthly payments.

The shared appreciation mortgage is a fixed rate term loan that can run up to 30 years. The interest rate is reduced depending on how much of the property's future value the borrower is willing to give to the lender. For instance, with the standard 30-year fixed rate mortgage of eight percent, the borrower can reduce their mortgage down to six percent. With 20 percent appreciation given to the investor, the borrower pays 7.5 percent interest. With 30 percent appreciation given to the investor, the borrower pays seven percent interest. With 40 percent appreciation given to the investor, the borrower pays 6.5 percent interest. With 50 percent appreciation given to the investor, the borrower pays only six percent interest. Any increase in the value of the home will be split with the mortgage lender if the mortgage is refinanced.

Who it's for

A shared appreciation mortgage provides borrowers with the opportunity to obtain a larger mortgage with the same income and without using all available cash. The shared appreciation mortgage also allows people to simply buy a larger home. These loan structures are complicated and are for people who don't believe home values will rise or fall too much during the term of the loan.

What you need to do to apply

In order to obtain a shared appreciation mortgage, interested applicants will need to contact a local lending institution and inquire about the different options and rates available. Personal and financial history, including a credit report, will need to be made available to the lending institution. A property appraisal may also be required.

Apply for a Shared Appreciation Mortgage (SAM)

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