Are Balloon Mortgages For You?
A balloon mortgage can be an excellent option for many home buyers. A balloon mortgage is usually rather short, with a term of five to seven years, but the payment is based on a term of 30 years. They often have a lower interest rate, and can be easier to qualify for than a traditional 30 year fixed mortgage. There is, however, a risk to consider. At the end of your loan term you will need to pay off your outstanding balance. This usually means you must refinance, sell your home or convert the balloon mortgage to a traditional mortgage at the current interest rates.
Definitions
- Mortgage amount
- Original or expected balance for your mortgage.
- Interest rate
- Annual interest rate for this mortgage.
- Term in years
- The number of years over which you will repay this loan. The most common balloon mortgage terms are 5 years and 7 years. After the mortgage term is complete, you will then need to refinance or pay off the remaining balance.
- Monthly payment
- Monthly principal and interest payment (PI). The monthly payment is calculated using a 30 year term.
- Total payments
- Total of all monthly payments over the term of the balloon mortgage. This total payment amount assumes that there are no prepayments of principal.
- Total interest
- Total of all interest paid over the term of the balloon mortgage. This total interest amount assumes that there are no prepayments of principal.
- Prepayment type
- The frequency of prepayment. The options are: none, monthly, yearly, and one-time payment.
- Prepayment amount
- Amount that will be prepaid on your mortgage. This amount will be applied to the mortgage principal balance, based on the prepayment type.
- Start with payment
- This is the payment number that your prepayments will begin with. For a one time payment, this is the payment number that the single prepayment will be included in. All prepayments of principal are assumed to be received by your lender in time to be included in the following month's interest calculation.
- Savings
- Total amount of interest you will save by prepaying your mortgage.
The mortgage calculators are provided by KJE Computer Solutions, LLC and made available to NUMBER1EXPERT as self-help tools for your independent use and are not intended to provide investment advice. We can't guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Agency >Beneficial Brokers
Homebuyers who use the Internet to start their home search may be lured by the promises of realty companies advertising "one-stop shopping" guaranteed to meet all your housing needs. But before you sign up with an online company, consider the benefits of meeting personally with a real estate agent or broker who can represent your best interests in the transaction.
A full service real estate broker will be informed about the current trends in your local market. He or she will personally show you properties that satisfy your unique requirements. When you want to discuss your options for a home mortgage loan, your broker will refer you to a reputable mortgage professional who can help you choose a loan that meets your specific needs. Your broker will have a working relationship with home inspectors and homeowner's insurance companies whose professional integrity they can vouch for. Online "one-stop" companies profit from handling all aspects of a transaction, but the homebuyer may not receive adequate personal attention or get the best deal. It is to your advantage to engage the services of a real estate agent or broker, because their sole motive is to protect and guide you during the complex process of buying property.
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| Q |
Which famous skilled mason laid the cornerstone of the Capitol Building in Washington, D.C. in 1793?
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| A |
George Washington, the first President of the United States. |
 See More Real Estate Trivia > |
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