Balloon Mortgages

Balloon Mortgage
 A mortgage loan with a fixed or floating interest rate for an initial time period (usually 10 – 15 years). Once that time is up, the buyer pays the remaining balance on the loan in full or refinances. Because the bank gets all its money back in 10 or 15 years rather than the standard 30 years, balloon mortgages often can offer lower interest rates. But before taking such a loan, the borrower should be sure he can come up with the balloon payment before it’s due, usually by selling or re-financing the property. These loans are most commonly used to finance commercial real estate purchases.


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