Is Pick-a-Payment Back?


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

Interest Only

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


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