Interest-only loans felt like a cheat code back in 2005...

I used to tell clients an interest-only HELOC was the smart move for a $50k kitchen remodel, no questions asked. Then the 2008 crash hit and I watched three people lose their homes because the balloon payment came due and they couldn't refi. Now I look at these new 'payment option' ARM products popping up and wonder if we're just repeating the same mistakes all over again?

2 comments

2 Comments

jessica_ross384d ago

Oh man, the 'payment option' ARMs are back? We really love running face first into the same rake dont we.

thomasshah4d ago

Payment option ARMs actually make sense for borrowers with variable income who understand the risks. A self-employed person or commission worker might benefit from the low minimum payment during slow months. The key is knowing what you're signing and having a plan for when payments adjust upward.