What is a Balloon Mortgage and How Does it Work?

A balloon mortgage is typically a short-term fixed-rate loan that involves small payments for a fixed period of time and one large payment for the remaining amount of the principal due at a pre-arranged date in the future...... An example: A Lender might allow for Interest Only payments for 3 years and in month 37, they'd require that the balance of the loan be paid in full or the Borrower might be required to apply again.

A balloon mortgage simply means that at some point the entire remaining balance will be due and payable.. There are no "Conforming" loan's right now that have balloon's, but on the private (Hard Money) or seller financed side, we still see some.. Example: A property is offered with "Seller Financing".. Seller agrees to finance you at 7%, but they want to be fully paid off in 5 years.. so, you make payments based on 7% interest, but by the 5 year mark.. you have to pay the remaining balance in full.. I'm a preferred Lender with Arizona and California being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893