Mortgage Calculator Me Logo
mortgage calculators categories
Mortgage Refinancing Questions
Mortgage Refinancing
The Meaning Of A Credit Score
Mortgage Fraud Prevention
Piggyback Second Mortgage
What Is A Jumbo Mortgage Loan
CashBack Mortgage
50 Year Mortgage
Pay Off Mortgage Early
The Truth On Loan Amortization Calculator
mortgage calculators categories
search categories
Web This Website

mortgage calculators bread crumb home > Blog

Balloon Payment Mortgage

A balloon payment mortgage is a fixed-rate non amortized mortgage with a large final payment. Typically, the mortgage matures from five to seven year term. At the end of the term, the borrower pays final payment which is much larger than the regular mortgage payment. Hence, the final payment represents the balloon.

Most balloon payment mortgages are interest only mortgage. The borrower only pays the interest on periodically. So, the principal remains the same. At the end, the borrower pays the substantial principal.

For example, the monthly mortgage payment comes to $3,333.333 on a $200,000 mortgage with 20% annual percentage rate. First, you calculate the total interest which comes to $40,000 ($200,000 x 20%). Then, you divide the total interest with the number of payments on a year. Thus, the monthly mortgage payment comes to $3,333.33 ($40,000 / 12 monthly payments).

The mortgage payments on balloon payment mortgage are commonly based on a thirty year mortgage with a term of five to seven years. It is also easier to qualify for this mortgage. And, the interest rates are much lower than traditional mortgage.

The borrower usually sells the property before the mortgage matures to avoid the final payment. At the end of the term, the borrower needs to pay the final payment. The borrower must sell the property, refinance the mortgage, or convert the mortgage before the end of term.

The borrower can convert balloon payment mortgage into traditional amortized mortgage. In an amortized mortgage, the mortgage payment pays off the principal on each periodic payment.


Post a Comment

<< Home

Tags: morgage calculators, morgage calculator, morgages_, morgages, morgage, mortgage claculator, mortgage calcutator, mortgage caculator
mortgage calculators categories

Mortgage Calculators

Read about articles, facts, real-life stories, resources, and tutorial on mortgage and real estate.

list of partners
mortgage calculators categories
How do you subscribe to Mortgage Calculators Blog
blog xml
Subscribe in NewsGator Online
Add Mortgage Calculators Blog to Newsburst from CNET
Add to My AOL
Subscribe in Bloglines
Add to netvibes
Add to Bitty Browser
Add to Plusmo

Copyright (c) 2005-2009 All Rights Reserved.

Information and calculation provided on this mortgage calculators website is for general purposes only. It is not intended to take the place of advice from your mortgage brokers.