Mortgage options series - Balloon Mortgages

Feb
28

So you came back for the fourth installment of the top 5 most popular mortgage options series. I am so glad you did because today we are talking about a balloon mortgage and it can be tricky. As I mentioned earlier, the 2 riskiest mortgage options in the series are the Interest-Only option and the balloon option. So let’s waste no more time and get into it, shall we?

A balloon mortgage loan is an interesting option that has definite pros and cons. My experience with balloon loans has been good so let’s look at the pros first.

A balloon mortgage loan works like this … you borrow the amount of your home and get set up with a fixed payment. You have a set time frame to make your payments. Usually the loan is for 5-7 years. The interest rates on balloon mortgage loans are usually lower than those of a fixed rate mortgage since the life of the loan is shorter. At the end of the set time frame that you and your lender have agreed upon, the balance of the loan is required. This type of loan is great for when you know you are only going to be in the property for a short amount of time.

The cons to a balloon mortgage loan are that you do have to come up with the balance of the loan in a short amount of time. So if, when you buy your home in Broward County and you think you will only be here a short time but find yourself here for a longer extended period of time, then you have to either refinance your loan and take the chance of getting a higher interest rate or find a large sum of money at once Either way, the remaining balance of the balloon mortgage is due at one time. So you need to make plans as to what to do when the balloon mortgage comes due.

There is a balloon mortgage calculator that you can use to find out if a balloon mortgage is right for you. There are also other types of mortgage calculators at Best Rate Mortgage House. Take the time to play around with the numbers and see what works best for you and your situation. Or better yet, call me, Christine Adler, and the Adler Team at (954)-785-2900 and let us show you around the mortgage block.

Mortgage Options Series - Government loans
Upcoming events in Broward County and the surrounding areas
Broward County's best realtor for selling your home
Mortgage Options Series - Interest - Only Loans
To rent or buy real estate? That is the question...