QandAs: Loans

What is a Balloon Mortgage Loan?

Answer:
A Balloon Mortgage Loan is a large payment due

at the end of a loan. Fixed-rate balloon mortgages generally have a 15-year term, whereas adjustable-rate balloons can be 5 , 7, or 10 years in length.

You will likely receive a lower interest rate on a balloon than a regular mortgage. A balloon is a good option if you intend to sell your home or refinance the loan before the term is up. Even if you stay in the loan for the full term, you won’t have to pay off the balance in cash. You can simply refinance the balloon when it comes due.