Question:

Balloon Mortgage Definition

Answer:

A balloon mortgage resembles a fixed rate mortgage with premiums evenly spread over a fixed period. However, a balloon mortgage does not amortize over the assigned period. Rather, it will have a balloon payment due at the end of the term; hence the name.

For example, a 30/15 balloon mortgage will have monthly payments as if the mortgage would amortize in 30 years. However, at the end of the 15th year, the remaining balance becomes due. Usually, at this point the borrower has to pay off or has to refinance. Other types of balloons are the 20/10 or 15/10 balloon mortgage types.

Adjustable rate mortgages are often offered as an alternative to balloon mortgages.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
Was this Mortgage QnA helpful?
Not at all
  • Currently 3/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Definitely
Add to this Answer

Mortgage QnA is not a common forum. We have special rules:

  • Post no questions here. To ask a question, click the Ask a Question link
  • We will not publish answers that include any form of advertising
  • Add your answer only if it will contrubute to the quality of this Mortgage QnA and help future readers
If you have trouble reading the code, click on the code itself to generate a new random code. Verification Code Above:
Bookmark and share this QnA: