Balloon Mortgage Basics

Louie Latour

Visitors: 114

Balloon mortgages have a bad reputation these days; however, when used properly they can be an excellent short-term fix to a financial need. Here is how you can use a balloon mortgage to your advantage.

Balloon loans are a short-term mortgage that provides very low monthly payments and low interest rates for a specified period of time. At the end of the specified period of time the balance of the loan is due in full. This means you will have to refinance or pay off the entire loan balance. Most mortgages of this type come with terms ranging from five to seven years. These loans are repaid using an amortization schedule based on 30 years of repayment; while this results in a much lower payment, you will be required to pay more when the balloon payment comes due.

Balloon mortgages are ideal for real estate investors or those trying to sell a property when they have already purchased their new one. There is risk involved with this type of mortgage; if you are unable to sell or refinance the mortgage when the balloon payment is due you could lose your home.

Conversion/Reset Options

If you are considering a balloon mortgage there are ways to minimize your risk. Conversion and reset options allow you to change the terms of your mortgage when the balloon payment is due. Using this option could result in higher interest rates and finance charges.

Balloon mortgages are ideal for homeowners that:

  • Plan on selling their properties when the balloon payment is due and need low monthly payments.

  • Expect a large increase in their income and will be able to pay off the balloon payment when it becomes due.

    Avoid Using a Balloon Mortgage:

  • If you are planning on staying in your home and will not be able to refinance or pay off the balloon payment when it becomes due.

  • If you do now want the risk associated with rising interest rates that could raise your monthly payment significantly when you are forced to refinance the loan.

    To learn more about your mortgage options, including how to avoid common mistakes, register for a free mortgage guidebook.

    To get your free mortgage guidebook visit using the link below.

    Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. For a free copy of “Mortgage Refinancing: What You Need to Know, " which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit .

    Claim your free guidebook today at:

    Balloon Mortgage Refinance

  • (469)

    Article Source:

    Rate this Article: 
    Balloon Twisting Instructions The Benefits of Balloon Twisting
    Rated 4 / 5
    based on 5 votes

    Related Articles:

    Learn to Make Balloon Animals - The Basics of Balloon Twisting

    by: Alexander Creppe (April 08, 2008) 
    (Home and Family/Crafts Hobbies)

    Balloon Payment Mortgage

    by: Dennis Estrada (October 02, 2006) 
    (Real Estate)

    Home Mortgage Loans - Fixed Rate, Adjustable or Balloon, Which One Is Right For .

    by: Carrie Reeder (May 19, 2005) 
    (Finance/Mortgage Refinance)

    Mortgage Information - Refinancing? Second Mortgage? Home Equity Loan? ..

    by: Carrie Reeder (June 07, 2005) 
    (Finance/Mortgage Refinance)

    Mortgage Refinance Information: Mortgage Refinancing Basics to Get You Started

    by: Louie Latour (October 30, 2006) 
    (Real Estate)

    Mortgage Refinance Information - Cash Out Mortgage Refinancing Basics

    by: Louie Latour (November 09, 2006) 
    (Real Estate)

    Balloon Twisting Video - Make Balloon Animals Using Balloon Twisting Video

    by: Alexander Creppe (August 20, 2007) 
    (Arts and Entertainment/Humor)

    Best Mortgage Rates - Know Your Mortgage Basics

    by: Ernesto Maitim (November 04, 2008) 
    (Finance/Mortgage Refinance)

    Instruction on Balloon Twisting Reasons to Learn Balloon Twisting

    by: Stewie D (June 30, 2008) 
    (Arts and Entertainment)

    Balloon Twisting Instructions The Benefits of Balloon Twisting

    by: Stewie D (June 28, 2008) 
    (Home and Family/Crafts Hobbies)