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These shortcomings result from the CAM, CPM, and GPM all having fixed interest rate originations and having predetermined payment patterns, despite the reality that payment patterns can be adjusted to suit borrowers as expectations change. Regardless of the state of the economy, the interest rate and payment schedule won't alter.
Various mortgages are now offered with variable interest rates or payment terms that fluctuate based on the state of the economy.
What is fixed interest rate?
A fixed interest rate is a rate that never changes that is applied to a liability, like a loan or mortgage. It might be applicable for the full loan term or just a portion of it, but it doesn't change over the course of a predetermined time. Mortgages can have a variety of interest-rate choices, such as one that combines a fixed rate for a portion of the term and an adjustable rate for the remaining portion. These are known as "hybrids."
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