#ThrowbackThursday – Remember 07/08 when the housing bubble burst? Remember those loans we were doing back then, the neg am pick a payment loans? How about interest only? Those are still around now. What most LO’s do not know is how this works with what’s called RECASTING. For example, if you have a 30 year fixed Interest Only loan, it’s really interest only for the first 10 years. Then whatever balance is left over come year 10, the loan becomes a 20 year principle and interest loan. (It Recasts). Based on the balance at the current time.
This could be great for those that are disciplined and apply some towards their principle through these years. However, if they didn’t they are in for a payment shock that month it recasts for sure. Technically this was 10 years ago now. And there probably is loans out there that are going to recast any minute. Within the last 12 months this has been happening.
Don’t get me wrong I like Interest Only products and have them now, but they should be taken and used by a product for someone who is educated on how they work. I also believe this could be a campaign some mortgage company does to advertise they are helping those that were in them. Great message. Throwback to a year ago on this video where I talked about the same thing;
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