Balloon?

What exactly is a balloon mortgage? Thanks!

Comments(5)

  • clevincc1st December, 2004

    Example: You get a loan that is a 5 year balloon. The payments on that loan are based upon a 30 year mortgage (usually). However the last payment due in 5 years is for the balance of the loan (which is likely to be almost as much as the original loan as not much principle is paid off during the first 5 years). There is often a slight interest rate advantage on a ballon loan.

  • brandonlaughridge171st December, 2004

    So would one approach to get a seller to finance the downpayment be a balloon mortgage? 20% balloon at say 7% for 5 years and I refiance a few months before the final payment is due? Is that smart? Has anyone used that idea? Thanks.

    Brandon

  • Nightengale1st December, 2004

    Well I guess the question is, what is it that you are trying to do? Create a cash flow?

  • brandonlaughridge172nd December, 2004

    Ya, cashflow. Any ideas?

  • ddemott8th December, 2004

    Depends on your goal. For me, if I was flipping a house in a short period or better yet, if I was buying it, renting it for say 4 1/2 years then selling it a 5 year balloon might look good to me. A baloon gives me good cash flow for a short period. Structure your loan types around your goals.
    [addsig]

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