Driving back home from dinner the other night and I saw this sign. No, this is not a left over sign from 2007, its brand new.
I have no idea what kind of loan they are offering and I do know that loans are not easy to come by these days. Files need to be highly documented and are thick these days.
So now I am curious, who in the world would be offering the old “pick a payment”? Or is this simply a scheme to make you think we are back in the good old days (you know, “fog a mirror, get a loan”) in order to get you in to look at their overpriced new homes.
Pick a Payment loans were loans that allowed you to choose to each month pay a different amount based on four different options:
15 year amortized
30 year amortized
Less than the Interest – or a Negative Amortization loan
Most used the 4th option (which actually turned out to be a wise decision) and most of these loans defaulted.
Scott Dauenhauer CFP, MSFP, AIF