A balloon mortgage can be an excellent option for many homebuyers.
A balloon mortgage is usually rather short, with a term of 3, 5 to 7 years are common. The payment is based on a term of 30 years. They often have a lower interest rate, and it 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. Use a balloon mortgage calculator to view the change in principal over the life of the mortgage. This usually means you must refinance, sell your home or convert the balloon mortgage to a traditional mortgage at the current interest rates…
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