Answer : Do not be fooled by what is too often deceptive
advertising. These loans have interest rates much higher than 3%. What they have is payment rates that start as low as 1%
or higher (hence the deceptive "if you're paying less than 3% we can save you money"). These advertisements (often Spammed)
represent Neg-Am loans or Options arms.
Neg-Am loans are adjustable rate mortgages that have payment rates less than the interest that is
due. Instead of reducing the debt a little with each payment (amortized loan), the debt actually grows with each payment
(negative-amortized loan). Obviously these loan should only be used in situation where the payment must be at the very minimum
for a short period of time and there is plenty of equity in the home to start.
