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Pick-a-payment loans are, as the name suggests, loans that allow you to decide month by month how much will pay on your new home loan. Pick-a-payment loans are usually available on a new home loan, and they allow you to choose whether you want to make a minimum payment each month, an interest only payment, or fixed rate amount payment. Your lender and you will decide what the minimum payments are on pick-a-payment loans and you will decide which fixed rate amount payments you will be able to make each month. However, each month you'll be able to decide how much to pay. Pick-a-payment loans are also known as option arm loans and anyone who is considering a loan should consider these loans as a possibility. Pick-a-payment loans have many advantages. These adjustable rate loans are among the most flexible loans available. Pick-a-payment loans are very good for freelancers, seasonal workers, business people, and the self-employed, whose income varies widely month-to-month. For these people, pick-a-payment loans adjust to their income levels, rather than forcing these workers to adjust their lifestyles to their debt payments. On the other hand, pick-a-payment loans do have a few drawbacks. It is important to stay on top of these loans, since you will have to report which payment you are making each month. Changing payments may also put you at risk for negative amortization and can make budgeting more difficult. For these reasons, pick-a-payment loans can mean extra work -- borrowers will need to look at their amortization schedule carefully and plan ahead so they can make varied amount payments that also reduce their principal loan amount. If you think that pick-a-payment loans may be for you, talk to lender. They can help you figure out how much you stand to gain with pick-a-payment loans and what drawbacks may be a problem for you with these loans. For some borrowers, pick-a-payment loans are great for a new home loan, while for others they are more trouble than they are worth. Pick-a-payment loans can offer flexibility so that mortgage refinancing does not have to be a burden for you anytime soon. However, they also require careful financial tracking and planning to ensure that your long-term financial goals are met.