| There are many different types of mortgages. A | | | | lender about refinancing eligibility. |
| balloon mortgage is different from a 30 year fixed | | | | Balloon finance mortgages offer the benefit of costing |
| mortgage. With a balloon mortgage the payments are | | | | less than fixed mortgages. Instead of paying interest |
| calculated the same way as with a fixed mortgage, | | | | for 30 years a person is only going to pay for half or |
| but the actual payoff date is much sooner than 30 | | | | less than half of that time. This can save a lot of |
| years. Balloon mortgages have their advantages and | | | | money when speaking in terms of $100,000 loans |
| disadvantages and homeowners should really weigh | | | | typical for homes. Many people choose a balloon |
| their options before making a decision about which | | | | mortgage because the payments are often lower than |
| type of mortgage to choose. | | | | with a fixed loan due to the lesser amount of interest. |
| With a fixed 30 year mortgage the homeowner will | | | | Balloon mortgages are typical, though, when a person |
| make regular payments until their last payment in 30 | | | | is not planning on still owning the house when the |
| years. Their payments are all the same, with respect | | | | mortgage comes due. This makes a better deal in the |
| to the interest rates and such, and even the last | | | | end for them. |
| payment is going to be the same or close to the other | | | | The downfall of these mortgages is obviously coming |
| payments made. | | | | up with a way to pay off the loan. After a short period |
| A balloon mortgage is done for a short period time, | | | | of time like 15 years or less, the outstanding balance is |
| usually less than 15 years. With this type of mortgage | | | | still going to be quite large. Unless a person is |
| the homeowner makes regular payments until the last | | | | absolutely sure they will either sell or be able to afford |
| payment which is then the remainder of the loan due in | | | | the balloon payment at the end of the mortgage then |
| full. | | | | a balloon mortgage may not be the best idea. |
| There are two ways to deal with these mortgages. | | | | Balloon mortgages are something that is an option and |
| The homeowner can pay off the loan at the due date | | | | work for many people. It all really depends on the |
| or they can refinance to pay it off. However, the | | | | homeowners situation and future plans. It is possible to |
| lender can deny refinancing due to credit history which | | | | end up in a bad financial place if planning for the end |
| can likely change since the beginning of the mortgage. | | | | payment is not done, so planning is an essential part of |
| Any late payments could effect the decision of the | | | | balloon mortgages. |