Balloon Mortgages

Balloon loans are short term mortgages that have some features of a fixed rate mortgage. The loans provide a level payment feature during the term of the loan, but as opposed to the 30 year fixed rate mortgage, balloon loans do not fully amortize over the original term. At the end of the loan term there is still a remaining principal loan balance and the lender generally requires that the loan be paid in full. Balloon loans can have many types of maturities, but most balloons that are first mortgages have a term of 5 to 7 years.