The balloon mortgage is the Sasquatch of loans – something you hear about but may never see. They really do exist, though, even in today’s more conservative mortgage market. IngDirect (Stock Quote:.
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A balloon payment is a large payment due at the end of a mortgage’s repayment term. It is most common with second mortgages, especially home equity lines of credit, although primary mortgages sometimes have balloon payments as well. Most buyers required to make a balloon payment expect to refinance the loan before the payment is due.
There are four or five basic types of mortgage loans, depending on how you count. There are fixed rate mortgages, adjustable rate mortgages (arms), balloon mortgages, and special ARMs. Your regular,
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.
Mortgage Refinancing Refinancing your mortgage allows you to pay off your existing mortgage and take out a new mortgage on new terms. You may want to refinance your mortgage to take advantage of lower interest rates, to change your type of mortgage, or for other reasons.
Balloon loans have a bit of a shady reputation these days. Many experts blame balloon mortgages for causing the Great Recession that began in 2008, which leaves a lot of people wondering what a.
Define Balloon Loan “It seems very likely that the default rate on PRA loans will be significant.” Indeed it does. It is highly convenient for the politicians that under the bill no default on principal repayment could.
Conditional Refinance With Current Lender. The balloon mortgage contract may include an option to refinance the loan with the current lender if a minimum number of conditions are met. Typical requirements include that the home is owner occupied, there is no second mortgage on the home and the mortgage payments are current.
The borrowers took out two mortgage loans to purchase property and defaulted on both. calls wherein they threatened to foreclose due to an allegedly unpaid “balloon balance” on the second mortgage..
Refinancing the Balloon Amount. Often, the planned or most financially feasible solution to the balloon payment on a mortgage is to apply for another loan to refinance the balloon amount.