What is a Shared-Appreciation Mortgage

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What is a Shared-Appreciation Mortgage?

Also known as a "SAM," a shared-appreciation mortgage is an arrangement where the lender gives the borrower a lower interest rate in return for a share of the appreciated value of the home. This is determined when the property is sold or the mortgage is paid in full.

Generally speaking, the greater the lender's share, the lower the borrower's rate (and vice versa).

advantages: The primary benefit is that a borrower can get a lower interest rate.
disadvantages: This loan typically has a pre-payment penalty. Additionally, the unpredictability of a home's future value may result in the borrower paying more than expected.

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