| Today, there is a specific loan type for just about | | | | option here. |
| anything that you could need money for - whether | | | | If you are looking to buy a house, and stay for a |
| short or long term. A balloon loan also has a specific | | | | short term, either less than the typical 5, 7 or 15 |
| purpose, and it could be what you are looking for if | | | | years, then you have a real good way to save some |
| you are looking for something that is more of a short | | | | money. A balloon loan allows you to enjoy the lower |
| term than long term. Here are some ways that a | | | | monthly payment rates, and you can sell it before |
| balloon loan could help you. | | | | the balloon payment becomes due. This gives you |
| A balloon loan, whether as a first or a second | | | | the perfect opportunity to buy an even a larger |
| mortgage, is always set up for a 30-year span. This | | | | house for less. The only problem is if you decide you |
| is so that there is a basis with which to calculate the | | | | want to stay - then you must refinance. |
| payments. Your payments will always be what they | | | | Balloon mortgages are more commonly being used as |
| should be to become fully amortized over the | | | | a second mortgage now, in order to reduce monthly |
| 30-year period. Balloon loans then are given a period | | | | payments and save hundreds of dollars each year. If |
| of time, such as 5-year, or seven-year, or even a | | | | you do not have a 20% Downpayment when you |
| 15-year, in which they become due. | | | | apply for your mortgage, then you will be required to |
| Balloon mortgages are usually fixed rate mortgages. | | | | get private mortgage insurance (PMI). You can avoid |
| The interest rate on a balloon mortgage is also a little | | | | this by getting a piggyback loan, one for 80% (first |
| lower, too, which reduces your monthly payments | | | | mortgage) and the other for 20% (balloon loan), and |
| even lower, bringing even larger savings. There | | | | then you will not need to get the costly and |
| generally are not any limits on interest placed on | | | | unnecessary PMI. |
| refinancing, such as there might be with a 30-year | | | | It is even possible to get a larger balloon loan if you |
| ARM, so you will be refinanced at whatever is the | | | | get it against the equity built up in your house. |
| current rate. Refinancing is simpler, though, and, if it is | | | | Another option would be for the purpose of projects |
| in your contract, you will not need to be requalified, | | | | around the house in the way of construction and |
| or the property reassessed, and fees will usually be | | | | remodeling - especially if you want to do it before |
| minimal. | | | | you sell. When applying for a balloon loan you want |
| When a balloon mortgage becomes due, then full | | | | to be sure to check out the various fees and |
| payment is expected. However, because there is so | | | | compare several potential mortgages in order to see |
| much left to be paid, most people are required to | | | | which one has the best deal for you. Also make sure |
| refinance in order to pay the balloon mortgage off. | | | | that you get one without any penalties for paying it |
| Whatever the interest rate is at the time, is the rate | | | | off early. |
| that you will have to take - there is not much of an | | | | |