Ballon Mortgage?

Question

Whats the advantage of using a ballon mortgage?

Answer 1

You will have much lower monthly payments with a balloon mortgage, than you would have if you had used a conventional, equal-payments mortgage financing the same amount of money. The large balloon payment at the end of the term of the balloon mortgage, can hopefully be financed by paying it off with the proceeds from another loan/mortgage, which you (hopefully) will have an easier time qualifying for at that future date, having faithfully made all the payments on time with the original balloon mortgage. Alternatively, you will have (hopefully) bought time for yourself to have earned or saved the amount necessary to make that final, large balloon payment.

Answer 2

There isn't an advantage to a balloon mortgage unless you don't have the money you need at the current time. However if you expect to have it by the time the balloon is due you will be safe. You shouldn't get this kind of a mortgage if it has a no refinance clause. You need to make sure you will have the money when the baloon comes due or you can get hurt. The best mortgage to get right now is a 15 year fixed. You can't go wrong. Right now the terms on a 15 year fixed mortgage is lower than in the last 20 years. It may make things a little tight in the beginning however you will save many thousands in interest.

Answer 3

I think you are speaking of a balloon payment. This is a loan program where you make monthly payments but the loan is not really paid off at a certain time causing the remainder to be called a balloon payment.

Let's say you purchased a commercial property for $300,000.00 amortized for 30 years but the due date was for 10 years. What ever remaind of the $300,000.00 on the 10th anniversary of the loan closing would all be due an payable. This is called balloon payment.

Most individuals don't allow this situation to happen, they either refinance, sell the property of find some way to pay off the mortgage note.

I hope this has been of some use to you.

Answer 4

A lower payment but the balloon is a big payment usually at the end that catches everything up.

The balloon can work if you are in a job where you know your salary will increase and right now you need a small payment but know you will be able to pay the balloon off in full in the future. It's also good in a situation where you know you will sell your home before the balloon comes due.

Answer 5

It can give you a lower payment short term. Some of them allow you refinance after the period is up. This is the best option. However, these are best used if you are temporarily unable to make high payments, but you know you will be in a better position to pay regular mortgage payments by the time the period is up. They are also useful in other less conventional scenarios.

Answer 6

If you can't get a house with a fixed 15 or 30 or 40 year loan you can use a balloon that starts with a lower interest rate and then goes up year to year or after a set number of years like 5 or 7.

Answer 7

none.................

for my experience...

a lot of money to pay off at the end or refinance.