| In these days of hustle and bustle, and everybody | | | | with whatever the interest rate is at the time. It |
| just generally being in a hurry, it is also true that you | | | | could be much higher, and your monthly payments |
| can get a mortgage that way, too. But the speed | | | | much larger, too. In reality, though, the lender may |
| and the rush that may surround your getting a | | | | not refinance if you just fail to be on time with even |
| mortgage for that home that you wanted, may also | | | | one payment in the last year before refinancing. If |
| have prevented you from finding out what you really | | | | the interest rates, are high, you may not want to |
| got yourself into. Balloon mortgages are becoming | | | | refinance. In either case, you risk losing the house. |
| more common, but are they as good as some claim? | | | | Another problem is the amount of equity that you |
| Here are some things you need to know about | | | | will have after the 5 or 7 year period. There will not |
| balloon mortgages before you sign your name to one | | | | be much equity built up, and that could leave you |
| of these contracts. | | | | with a very bleak future because, even if you sell |
| Like other mortgages, a balloon mortgage is taken | | | | the house, you may not get enough for a serious |
| out for 30 years. One difference, though, is that it | | | | downpayment on another one. |
| never fully amortizes. Typically, they will be required | | | | If you plan on living there for any length of time, you |
| to be paid in full after only 5 or 7 years, but some | | | | are probably much better off with regular financing. |
| also go for as long as 15. Like a regular mortgage, | | | | One great advantage is that you can pick and |
| the payments are based on the 30-year period in | | | | choose a time when interest rates drop to be able to |
| order that the payments would be the same. | | | | consider refinancing if you want, rather than being |
| The difference comes in the "balloon" part. Just like | | | | stuck on whatever the rates are when you must |
| balloons are large and can suddenly get in your way, | | | | refinance. Besides that, you have a greater level of |
| so is a balloon mortgage. At the end of the 5, 7 or | | | | security for yourself and family in knowing that the |
| 15 years, when it becomes due, you owe the entire | | | | rates are secure (unless you get an ARM). |
| balance. Since most people cannot afford to hand | | | | A balloon mortgage does have a good customer, |
| over such large sums of money in such a short time, | | | | though, for someone who knows that they will not |
| the mortgage will need to be refinanced, or you | | | | stay in an area but for a few years. The steady |
| could sell the house in advance, or lose the house. | | | | payments gives them an opportunity to have a |
| There is a guarantee, usually, in the contract stating | | | | house, reasonable payments, and will allow them to |
| that you can refinance. While this should provide a | | | | sell in time to be able to be able to avoid having to |
| degree of comfort, you need to realize that if you | | | | refinance in order to keep the house. |
| refinance only when it is due, then you may be stuck | | | | |