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Financial salespeople such as investment advisors and mortgage brokers are recommending ‘new’ types of mortgages for improving cash-flow, freeing up money to invest, and having money to take that dream va

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

cation. Their sales pitches sound so enticing. But here’s what they don’t tell you.

In the past, the only decision to make when getting a mortgage was whether you wanted a fixed or adjustable rate. Now,

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

seniors are being pitched interest-only mortgages, option-ARMs and reverse mortgages. It’s easy to become confused and overwhelmed. The result is you can spend thousands of dollars in fees and end up with

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

a mortgage that doesn’t meet your needs.

In a traditional mortgage, part of each monthly payment covers interest while the rest goes to pay down the principle amount you borrowed. With each payment you

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

are decreasing the amount you owe and increasing your equity.

Interest-only, option-ARMs and reverse mortgages function quite differently from the traditional mortgage. Instead of decreasing the amount y

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ou owe, you will most likely be maintaining the same level of debt. In some cases you will actually be increasing the amount you owe—you will be going further into debt with each payment you make!

With a

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

n interest-only mortgage, you pay the amount of interest due each month for the first 10 years. This is still a 30-year mortgage, but you don’t begin paying down principle until year 11. Since there isn’t

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

any money going to principle, your monthly payments will be less than with a traditional mortgage only during those first 10 years.

This can make sense in certain situations—especially for cash-strapped

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

seniors. Since the monthly payment is lower, it will reduce what you take out of your retirement account. That means you won’t have to pay income tax on that retirement money. It can continue to grow tax

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

-deferred.

I only recommend this strategy as long as there remains at least 25% home-equity. Also, it’s not a good idea to tap into equity during the refinancing to buy a new car or take a fancy vacation

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

This isn’t free money. Spending the equity in your home is no different than spending the money you’ve invested in a CD or mutual fund.

The option-ARM is being heavily promoted these days—but watch out!

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

They’re sold based on their low introductory interest rate (as low as 1%) and a special low payment. And they give you the ‘option’ of the kind of payment you make each month. You can make the special lo

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

w payment, you can pay the interest-only, or you can pay principle and interest just like a traditional mortgage.

On the surface this sounds good, allowing seniors to increase cash flow or to free-up the

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ir home equity so they can invest it in other, ‘better’ investments such as equity-indexed annuities.

But don’t do it. People buying this mortgage think they are getting a great deal because of the low i

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

nterest rate and the low payment. What they don’t realize (and what isn’t properly explained to them) is that each time they make that special low payment they are going further into debt.

Think about it

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

. Let’s say you borrow $200,000 and the interest-only payment is $1000 per month. If you instead make a payment of $400 then the $600 in interest you didn’t pay is added to what you owe. So next month the

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

interest due is based on owing $200,600. Do this for a year and you have dramatically increased what you owe. Instead of saving money like you thought, you were actually spending the equity in your home

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

on other things.

The low introductory rate only lasts a short time, often just a few months. After that, you can end up paying a higher interest rate than if you went with a traditional mortgage in the f

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

irst place. The costs of getting an option-ARM are higher as well. These only make sense in a few isolated situations. Most people should stay away from them.

Next week I’ll talk about the advantages and

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

disadvantages of reverse mortgages. I will also share stories from my readers that illustrate the shady mortgage-related sales pitches that are now being used. Don’t buy one of these mortgages until then

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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I certainly can't blame you if you express disbelief and outright doubt when you read the words low APR credit card. That's like an oxymoron that's never going to come true, isn't it? When did a credit card ever have low APR?

Unfortunately there are many home buyers out there that don't have a realistic picture of how much they can actually afford to spend on a home. First time home buyers often make this mistake and end up wasting time and energy looking at homes they can't afford. Not only do buyers get their hopes up but the hopes of the seller. There is nothing worse than finding a house that you love and going to the bank to get a home loan only to find out that the bank will not lend you the selling price of the home. Because, according to them, you can't afford it.

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