What Is a Balloon Mortgage?
Disclaimer: This website provides general mortgage and financial information for educational purposes only. It does not constitute financial, legal, or mortgage advice. Housentia is not a licensed mortgage broker, lender, or loan originator.
This content is provided for general educational purposes only and does not constitute financial, legal, or mortgage advice.
Introduction
A balloon mortgage has small monthly payments for a set period, then a large balloon payment of the remaining balance is due. You typically plan to refinance or sell before the balloon date. See What Is an Interest Only Mortgage, What Is a Fixed Rate Mortgage, and Refinance.
Frequently Asked Questions
- What is a balloon mortgage?
- A balloon mortgage has relatively small monthly payments for a set period (e.g., 5 or 7 years), then a large "balloon" payment of the remaining balance is due at the end.
- What happens at the balloon date?
- You must pay off the remaining balance. Options include refinancing, selling the property, or paying in cash. If you cannot pay, you may default.
- Are balloon mortgages common?
- Balloon mortgages are less common today. They are sometimes used in commercial real estate or when the borrower expects to sell or refinance before the balloon date.
- What are the risks?
- The main risk is being unable to refinance or sell when the balloon comes due. Rates could be higher, or you might not qualify for a new loan.
Educational Disclaimer
This content is provided for general educational purposes only and does not constitute financial, legal, or mortgage advice.
Housentia is not a lender, mortgage broker, or loan originator.
Balloon mortgages are less common. Consult a lender for availability.