What
are Balloon Mortgages?
These types of mortgages are short-term loans that are fixed-rate
and begin with low payments. Balloon Mortgages end with a
single large payment for all remaining principal at the end
of 5, 7, or 10 years. A balloon mortgage might be a good idea
if you only plan to live in your home for a few years and
want to keep your housing costs low. Balloon mortgages can
be quite diffucult when the finaly payment comes around because
you will be making interest payments on the loan. We normally
advise that if you plan to remain in your home then you will
probably want to refinance before your final payment comes
due. Many balloon mortgages give you the option to refinance
but not all and you need to speak with your lender before
committing to refinancing.
5/25 Balloon Mortgage
The 5/25 Balloon Mortgage loan requires that you completely
pay your remaining balances in a single payment after 5 years.
Your monthly payment is calculated as if you will pay the
loan off over 30 years.
The purpose of the 5/25 Balloon mortgage goes with the idea
that you will sell your home or refinance on or before your
balloon payment date.
Do temp workers need a 5/25 Balloon Mortgage? The 5/25 Balloon
Mortgage is perfect for temporarily relocated workers or a
family that is certain that they will not stay in their new
home beyond a five year period. Unlike the five year Adjustable,
5/1 adjustable, and 5/25 two-steps programs which also offer
a fixed rate for 5 years, the borrower often enjoys a lower
interest rate for the 5/25 balloon mortgage because they are
not obliging the lender to extend credit beyond the initial
fixed period. Keep in mind that some balloon mortgages offer
the borrower a conditional right to reset which effectively
provides for an extension beyond the initial fixed period.
7/23 Balloon Mortgage
In a 7/23 balloon mortgage you are required to pay off your
outstanding balance after just seven years with your monthly
payment being based on a 30 year amortization schedule. The
7/23 balloon mortgage is a longer version of the 5/25 balloon
mortgage. This loan is for families who wish to have the security
of a 7 year fixed interest rate and plan to move before 7
years is up.
Before applying for a balloon mortgage make sure you check
out helpful online calculators and tables and see if the rates
are right for you. These types of balloon mortgages are most
popular in Michigan and are found in some auto loans with
special lenders.
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