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Balloon Payment |
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WHAT IS A BALLOON PAYMENT? |
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A balloon mortgage is sometimes used when the seller wants all the money within a few years, but the borrower can only afford low payments. So the mortgage schedule might be set as if the loan was going to be paid off over 30 years. But at the end of -- say -- ten years, the whole remaining debt must be paid off, in one big balloon payment. To get the money to pay it off, the usual procedure is for the borrower to refinance with another mortgage. The idea is that by that time, the borrower may have better credit and can do it with a regular 30-year mortgage. |
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Edith
Originally published on August 26, 2008 |
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