Question:

Is it possible to have an interest only balloon mortgage?

Answer:

Yes, it is. An interest only balloon mortgage will have you pay only accumulated interest during the initial period and at the end of the balloon term, you will owe the lender the entire amount you borrowed.

However, interest only balloon mortgages have not become the most popular type of home loans due to the variety of ARM home loans offered.

Instead of looking for an interest only balloon mortgage, you should acquaint yourself with an ARM. Surely, balloons and ARMs come a little riskier than FRMs, and an interest only loan, be it a balloon or an ARM, carries even higher risk.

It is not a coincidence that the current subprime mortgage market niche has created so many foreclosures due to ARMs whose fixed period expired and people accustomed to making only minimum or interest only payments cannot keep up with the adjusted rate, nor with regular payments. So, why do you need an interest only balloon mortgage in the first place? If you are not an experienced investor, taking an interest only balloon is not quite recommended.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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