| Balloon mortgages have a bad reputation these days; | | | | Conversion/Reset Options |
| however, when used properly they can be an | | | | If you are considering a balloon mortgage there are |
| excellent short-term fix to a financial need. Here is | | | | ways to minimize your risk. Conversion and reset |
| how you can use a balloon mortgage to your | | | | options allow you to change the terms of your |
| advantage. | | | | mortgage when the balloon payment is due. Using |
| Balloon loans are a short-term mortgage that | | | | this option could result in higher interest rates and |
| provides very low monthly payments and low | | | | finance charges. |
| interest rates for a specified period of time. At the | | | | Balloon mortgages are ideal for homeowners that:o |
| end of the specified period of time the balance of | | | | Plan on selling their properties when the balloon |
| the loan is due in full. This means you will have to | | | | payment is due and need low monthly payments.o |
| refinance or pay off the entire loan balance. Most | | | | Expect a large increase in their income and will be |
| mortgages of this type come with terms ranging | | | | able to pay off the balloon payment when it |
| from five to seven years. These loans are repaid | | | | becomes due. |
| using an amortization schedule based on 30 years of | | | | Avoid Using a Balloon Mortgage:o If you are planning |
| repayment; while this results in a much lower | | | | on staying in your home and will not be able to |
| payment, you will be required to pay more when the | | | | refinance or pay off the balloon payment when it |
| balloon payment comes due. | | | | becomes due.o If you do now want the risk |
| Balloon mortgages are ideal for real estate investors | | | | associated with rising interest rates that could raise |
| or those trying to sell a property when they have | | | | your monthly payment significantly when you are |
| already purchased their new one. There is risk | | | | forced to refinance the loan. |
| involved with this type of mortgage; if you are | | | | To learn more about your mortgage options, including |
| unable to sell or refinance the mortgage when the | | | | how to avoid common mistakes, register for a free |
| balloon payment is due you could lose your home. | | | | mortgage guidebook. |