Definition
A shared appreciation mortgage is a mortgage where the lender shares in property appreciation in exchange for a reduced interest rate. The lender gets a percentage of appreciation if the home sells or at loan's end.
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Lender shares percentage of appreciation if home is sold or at end of loan term.
Pro Tip
Shared appreciation mortgages benefit buyers planning to stay long-term with expected appreciation.
Example
Lender provides 5% mortgage rate in exchange for 20% of property appreciation.