I had a hard time getting a mortgage because my better half's credit was not so good so they had to base everything on me. The only type of loan we good get was a loan they called a balloon mortgage. It is fixed for 5 years at 7.25 and we were told we would be able to refinance after a couple of years. What happens if we don't refinance. Will my monthly payment go alot higher.
2007-12-17 09:02:11 · 6 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
A fixed rate balloon mortgage has a fixed rate for an agreed period of time, after which, the entire loan comes due. So, at the end of 5 years, the remaining balance of your loan will be due in full. You will need to refinance prior to that happening if you do not have the funds to pay the loan in full.
It's a risky move and highly advised that you try and stick with a long-term fixed loan. Many markets are very volatile right now and riskier loans have been getting many consumers into financial trouble.
Be sure you check out all options available to you before agreeing to one. Working with a large, national, direct lender is in your best interest.
If credit is an issue, look into FHA loans. I'm including a couple links for you.
2007-12-17 09:10:19 · answer #1 · answered by Quicken Loans 5 · 2⤊ 0⤋
As others have indicated to you that the full amount of the loan will be due at the end of 5 years.
Then you will need to refinance the loan again. You will be stuck with whatever interest rates that would be current at that time.
Want some advice? Do not get a loan with a balloon payment. Get a fixed rate for 30 years. If you can not afford that loan don`t buy the home.
2007-12-17 17:23:40 · answer #2 · answered by Big Deal Maker 7 · 2⤊ 0⤋
Your payment will not change at after 5 years. That's an Adjustable Rate Mortgage. What you have is a balloon. This means after the 5 year term, you have to come up with the total remaining balance or the mortgage holder can take your home away from you! Call a local broker/banker and get out of that quickly as possible!!!! If they're unable to refinance you at the current moment, talk to a good reputable broker who can tell you what steps to take to repair your wife's credit, and get a decent interest rate! Check out the mortgage glossary at the link below.
http://www.mtgprofessor.com/glossary.htm
2007-12-17 17:09:39 · answer #3 · answered by Mortgage Man 2 · 2⤊ 0⤋
The interest rate will be the same for 5 years. At that point your interest rate varies with an index such as the 11th District Cost of Funds. A ballon mortgage means there is a principal payoff due.
Read your loan documents...please...
2007-12-17 17:09:22 · answer #4 · answered by William H 5 · 0⤊ 0⤋
At the end of 5 years, the rest of the balance is due in full.
That's what Balloon means, there's one GIANT (think inflated balloon) payment due at the end.
I hope that helps.
2007-12-17 17:05:46 · answer #5 · answered by Michael K 5 · 2⤊ 0⤋
you will have a big payment due at the end of 5 years....
2007-12-17 19:05:32 · answer #6 · answered by Anonymous · 0⤊ 0⤋