Balloon Mortgages

If you plan to sell or refinance your home within a few years and want a fixed, low monthly payment, then a balloon loan may work for you. Balloon loans offer lower interest rates for shorter term financing, usually five, seven, or ten years.

At the end of the loan term there will be a remaining principal loan balance and the lender will require refinancing or paying off the outstanding balance with a lump-sum or "balloon" payment. Since this loan is a very short term loan and the lender is taking less risk, it is typically easier to qualify for than a loan amortized over 30 years.