Shared-Appreciation Mortgage - SAM


DEFINITION of 'Shared-Appreciation Mortgage - SAM'

A special kind of mortgage that allows the purchaser to pay a given amount of the loan balance to the lender by passing along a portion of the gain in value of the property. In return for this additional compensation, the lender agrees to charge a rate of interest on the loan that is below the prevailing market rate. Shared-appreciation mortgages allow the lender to recoup the balance of the "interest" charged when the property is sold.

BREAKING DOWN 'Shared-Appreciation Mortgage - SAM'

Shared-appreciation mortgages allow the purchaser to deduct the amount of gain passed to the lender as interest in the year paid when the property is sold. However, this type of home loan often has a time limit on when the balance must be repaid (e.g., 10 years). If the property is not sold by the deadline, the remaining balance can usually be refinanced at the prevailing market rate.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Refinance

    1. When a business or person revises a payment schedule for repaying ...
  3. Appreciation

    An increase in the value of an asset over time. The increase ...
  4. Fixed Interest Rate

    An interest rate on a liability, such as a loan or mortgage, ...
  5. Adjustable-Rate Mortgage - ARM

    A type of mortgage in which the interest rate paid on the outstanding ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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  1. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  2. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  3. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  4. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  5. How many FHA loans can I have?

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