Feature Property - Historic Property with 48.99 Acres

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.

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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.

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Betty Norman

Nancy Liipfert Associates

3709 Westridge Circle Drive

Rocky Mount, North Carolina 27804

Office:
(252) 813-2070

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Office:
(252) 813-2070