Saturday, May 31, 2008

What is a balloon payment for a mortgage?

A balloon payment would be the amount of money that is due at the end of a loan. Not all loans are 30 years. Some mortgage loans allow you to pay a lower payment for a short period of years with a balance that is due at the end. Typically these types of mortgage loans are 5 to 7 years in length. They differ from adjustable loans in that and adjustable loan will have a rate adjustment at the end of the fixed period versus have the entire balance due like on a balloon payment mortgage.

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