What is a Balloon Mortgage?

A balloon mortgage is a mortgage that is amortized over the full term of the loan repayment period but at the end of a specified period the balance of the mortgage comes due. Thus, a balloon payment needs to be made. For example, with a 7-year balloon you would make monthly payments for seven years that have been calculated based on a 30-year mortgage payment. At the end of the 7 years, the remaining principal balance would be due and payable in full.  more

A mortgage that has level monthly payments that will amortize it over a stated term but that provides for a lump sum payment to be due at the end of an earlier specified term. For example: The Fannie Mae seven-year balloon mortgage is a type of fixed-rate mortgage with a term of seven years. The principal and interest you pay are amortized over a longer period (30 years) than the actual term of the mortgage. At the end of the balloon period, you may pay off the outstanding balance with a lump-sum payment or exercise the option to refinance for the remaining term.  more

A balloon mortgage is a mortgage that is amortized over the full term of the loan repayment period but at the end of a specified period the balance of the mortgage comes due. Thus, a balloon payment needs to be made. For example, with a 7-year balloon you would make monthly payments for seven years that have been calculated based on a 30-year mortgage payment. At the end of the 7 years, the remaining principal balance would be due and payable in full.  more

A balloon mortgage is a short-term loan that offers lower monthly payments (and usually a lower interest rate) than a traditional fixed-rate mortgage because it’s not fully paid off at maturity. It’s so named because, at the end of the loan term, your monthly payment “balloons” to include payment of the outstanding principal. Basic features Most balloon mortgages have a term of either five or seven years but are amortized over 30 years. In other words, the amount of your monthly payment is based upon a schedule that would require you to make continuous monthly payments for 30 years in order to pay off the loan. But, because the term of the loan is so much shorter than this, you are left owing an outstanding balance. Usually, this amount must be paid off through refinancing the loan or selling your home. For example: Term: 5-year balloon mortgage Principal: $200,000 Interest rate: 6.5% Monthly payment: $1,264.14 Remaining balance at end of 5-year term: $187,222 Term: 30-year fixed- ...  more

A mortgage with periodic installments of principal and interest that do not fully amortize the loan. The balance of the mortgage is due in a lump sum at a specified date, usually at the end of the term.  more

A loan with a fixed rate payment for the first five to seven years of the loan, then a lump sum payment is due on the balance of the loan at a specified date when the balloon loan matures.  more

A mortgage that has level monthly payments that will fully amortize over the stated term, but which provides for a lump-sum payment to be due at the end of an earlier specified term. For answers to specific questions or concerns, contact us at 1-800-403-3595.

A mortgage that has level monthly payments that will fully amortize over the stated term, but which provides for a lump-sum payment to be due at the end of an earlier specified term.  more

A type of mortgage loan that does not fully amortize over its term. Since it is not fully amortized, a balloon payment is required at the end of the term to repay the remaining principal balance of the loan.

A type of mortgage in which the loan amount is amortized over the full length of the loan (usually 30 yrs), but the loan actually comes due after a few years (usually five or seven). The first payments go mostly towards interest. The balance of the loan is due in one final installment, called the BALLOON PAYMENT.  more