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Davie Home Finance, 115 Donna Rd NE, Palm Bay, FL 32907
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Balloon Loans
Balloon Mortgage - A mortgage that typically offers low rates for an initial period of
time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or
is refinanced by the borrower.
These can be ideal if you think you will be selling or refinancing your home in five to
seven years and want a low monthly payment during that time. It would be prudent
to make sure that you ask your loan officer that you will be able to refinance either
before or at the time the balloon is due, and what conditions may apply. If you have
concerns about meeting the refinance conditions or if you think the balloon term will
be due prior to you being ready to refinance or move, then the balloon mortgage
may not be your best option.
Ballon mortgages are most popular with 2nd mortgage notes, such as a 30 year
amortized note due in 15 years (30/15). With the creation of the 40 year mortgage
recently, 40 year notes due in 30 years has surfaced as a viable option for home
owners on 1st mortgages.
Balloon mortgages are great for cash flow. Since the interest rate is often much
lower then a standard fixed over 30 years mortgage. This means your payment will
be lower as well.
Most commercial properties are financed with Balloon loans. Since Balloon loans
are amortized over a longer period than they are due, they require lower monthly
payments than their fully amortization counterparts. For income producing
commercial property owners, loan programs with low monthly payments are most
preferred.
Balloon mortgages are expressed in numerical terms such as a 30 due in 15 or a
20 due in 5, etc. The first number refers to the length of the amortization schedule
and the "due in" refers to when the balloon balance becomes due.
Remember that lending criteria can change over time so that, in 7 years or
whenever the balloon might be due, the criteria for refinancing might be more
stringent, thereby making it more difficult for you to do the refi. Lenders offer lower
rates for balloon loans because their risk is lower. Essentially, some of the risk is
being transferred to you, the borrower in return for that lower rate.
Balloon Mortgage - A mortgage that typically offers low rates for an initial period of
time (usually 5, 7, or 10) years; after that time period elapses, the balance is due or
is refinanced by the borrower.
These can be ideal if you think you will be selling or refinancing your home in five to
seven years and want a low monthly payment during that time. It would be prudent
to make sure that you ask your loan officer that you will be able to refinance either
before or at the time the balloon is due, and what conditions may apply. If you have
concerns about meeting the refinance conditions or if you think the balloon term will
be due prior to you being ready to refinance or move, then the balloon mortgage
may not be your best option.
Ballon mortgages are most popular with 2nd mortgage notes, such as a 30 year
amortized note due in 15 years (30/15). With the creation of the 40 year mortgage
recently, 40 year notes due in 30 years has surfaced as a viable option for home
owners on 1st mortgages.
Balloon mortgages are great for cash flow. Since the interest rate is often much
lower then a standard fixed over 30 years mortgage. This means your payment will
be lower as well.
Most commercial properties are financed with Balloon loans. Since Balloon loans
are amortized over a longer period than they are due, they require lower monthly
payments than their fully amortization counterparts. For income producing
commercial property owners, loan programs with low monthly payments are most
preferred.
Balloon mortgages are expressed in numerical terms such as a 30 due in 15 or a
20 due in 5, etc. The first number refers to the length of the amortization schedule
and the "due in" refers to when the balloon balance becomes due.
Remember that lending criteria can change over time so that, in 7 years or
whenever the balloon might be due, the criteria for refinancing might be more
stringent, thereby making it more difficult for you to do the refi. Lenders offer lower
rates for balloon loans because their risk is lower. Essentially, some of the risk is
being transferred to you, the borrower in return for that lower rate.
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