Several years ago, before we moved, we had one of those ‘pick a payment’ mortgage products. They are insane loans and since I knew it was for a short period of time I wasn’t all that worried about what the future was going to be for that loan.
The ‘Pick a Payment’ loan gives borrowers a choice of several different payment options each month. You could pay less than the interest only, an interest only payment, a 15 year amortization or a 30 year am payment. On top of that the interest rates adjusts.
I just read that upwards of 24% of those loans are going to go bust as homeowners can’t afford them. The article stated that 65% of borrowers of these ‘Pick a Payment’ loans are only making the less than interest only payment and that’s the recipe for disaster.
If you want to learn more about this growing problem then I suggest that you read “Pick-a-payment loans turn poisonous“.
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Hi
What is this pick a payments option? Over here in the UK we have masses of mortgage products but none where we can choose our payments. Its a very interesting read. Is this still applicable or has the market changed since recent events?