What is a Balloon Mortgage?

Most mortgages in the marketplace are what are termed fully amortizing where after a certain defined period you will have paid off the mortgage.

Balloon mortgages, while not very prevalent in the marketplace, where for a short period of time (1-10) years you have a low or no payment and after this period you owe the entire balance due. These mortgages do have risk to the investor because of this so they will typically carry higher interest rates.

They can be beneficial with the lower initial payment but something will need to occur when the balloon payment comes due. You can either pay it off with savings, refinance to a different mortgage or sell the home.

Balloon mortgages can be difficult to find out in the marketplace with so many other mortgage options available for the consumer. You should consult with a trusted mortgage advisor at Hall Financial to learn more about these options and find one suitable for you.