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Balloon Mortgage Amortization Explained

BALLOON MORTGAGE: This type of mortgage works like a 30 year fixed mortgage but, after a pre-determined number of years, the entire remaining balance is due in one payment. (If you can picture a baloon, the lump sum due at the end would be the large, blown up part of the baloon.)

7 YEAR BALLOON MORTGAGE: The most common of the baloon mortgages, with a rate that is usually just slightly below that of a 30 year fixed mortgage. The payments are 'amortized' over a 30 year period, so a large balance will still exist after the 7 year period when the remaining balance becomes due in full. The idea, however, is that you have sold the house or will be refinancing before the term of 7 years expires. This program works well for people investing in property or purchasing a 'starter' home: they like the lower payment while watching the market for a good long-term fixed rate or the best time to sell the property.

10 YEAR AND 15 YEAR BALLOON MORTGAGE PROGRAMS ARE ALSO AVAILABLE.

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What are the balloon loan amortization options for a California Mortgage?

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MORGAGE GLOSSARY

Amortization | Amortization Schedule | Annual Percentage Rate - APR | Biweekly Mortgage | Bridge Loan | Cash Out | Conforming Mortgage | Conventional Morgage | Debt To Income Ratio | Direct Lender | Discount Mortgage Broker | Discount Points | Good Faith Estimate | Grace Period | Impounds | Interest Only | Jumbo Morgage | Loan To Value | LTV | Negative Amortization | No Ratio | Option Arm | Piggyback | PITI | PMI | Prepayment Penalty | Reverse Mortgage | Subprime | Truth in Lending | Wholesale Lender | Yield Spread Premium | YSP

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