what is a balloon note and how does it work ?

Question

i have found some realistate that me and my girlfriend want to purchase.we have some land up forsale.i was told that we could get a loan on the property that we own to purchase property that we are wanting to own with a balloon note.how does this work?

Answer 1

Usually they are 5 or 7 year balloon loans. It means you enjoy a low rate for 5 or 7 years, but then owe the balance of the mortgage at the end of the 5-7 years. It work out well if you're wealthy or expecting a large sum of money in the near future. If not, you must find a place to refinance you immeadiatley at that time or run the risk of losing your home.

Answer 2

Balloon Note

Answer 3

It is a note that is amortized over a long time (the payments are set up as if the note will last a long time, for instance 30 years). The note becomes due and payable in a much shorter time- maybe 5 years into a 30 year note. Most people plan on selling within that time or plan on getting a new note at that time. Some balloons have a guarantee that the bank will refinance but no guarantee as to what the interest rate will be.

In the 1980's in Texas a number of banks went out of business and those "guarantees" were worthless.

Answer 4

A balloon generally means you make payments based on a 30 year term, but anywhere from 1-15 years into the loan, the entire balance is due. Most commonly, 5, 7 or 15 years from inception of the loan.

They're used often in private transactions, to make sure the buyer has to get their own new financing after a few years, or any time someone wants their loan paid off sooner than later.

In your case, they'd want you to pay it off once you sold your property.

Answer 5

I assume this is the same as a balloon mortgage. That means you get a regular mortgage, but for just a short period of time - say 5 or 10 years. But you make payments as if it was for a longer period - say 30 years. At the end of the 5 or 10 year period, however, you have to pay off the entire amount due in one lump sum. The idea is to let you buy the property even if your credit is a little shaky. when the property appreciates in value, you should be able to get another mortgage when the last payment is due, when you have more equity in the property.

Answer 6

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RE:
what is a balloon note and how does it work ?
i have found some realistate that me and my girlfriend want to purchase.we have some land up forsale.i was told that we could get a loan on the property that we own to purchase property that we are wanting to own with a balloon note.how does this work?

Answer 7

Usually, they're done as a 30/15 or something to that effect. You make payments based on a 30-year amortization schedule, but the balance of the principal is due in 15 years.

Answer 8

LOL wow you must have followed the balloon every step and maybe thats a world record

Answer 9

you make set monthly payments for the term of your agreement. At the end of the contract the remaining balance becomes due. One large balloon payment.