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balloon mortgages
advantages/ disadvantages
-Lower interest rates than standard 30-year fixed rate mortgages
-Often easier to qualify for
-Lower closing costs
- -Can reset to a standard, fully-amortized mortgage (if convert
- -mortgage seekers may qualify for a larger loan amount with a balloon mortgage than with an adjustable-rate or fixed-rate mortgage.
- Disadvantages
- -The first and the most prominent disadvantage of a balloon mortgage is that these loans tend to have very small time period of repayment. As a result it becomes difficult for people to cope up with the balloon payment installments.
- -The second disadvantage of the loan is that in cases, where the mortgagee/borrower is unable to pay off the loan or sell of the property, or refinance it, then he is left with no choice but to face foreclosure.
- -when you refinance the remaining balance of the loan you could end up with a much higher interest rate.
When would balloon mortgages not work?
If you are not planning on moving before your loan matures, you may be caught in a situation where your loan matures, but interest rates are high at the time of refinance, you may find yourself in a mortgage with a crippling interest rate.
What is a Balloon Mortgage?
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A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. Balloon payment mortgages are more common in commercial real estate than in residential real estate.
balloon mortgage rates
670-689
619-
what situation is best to use balloon mortgage
730+
690-729
Columbia Credit
Union
4.5%
5%
4.5%
4.75%
36 months
48 months
24 months
12 months
Farmers and Merchants Bank
1.15%
0.80%
0.60%
0.45%
balloon mortgage is best for someone who moves a lot and will be selling their house a few years after purchasing