Balloon Mortgage

A Balloon Mortgage is a type of loan for buying a house where you make small payments each month for a few years, usually around 5 to 7 years. But after that, there’s a big final payment, called the “balloon payment,” that covers the rest of the loan all at once. People choose balloon mortgages when they plan to sell the house or get a new loan before the big payment is due, so they don’t have to pay that large amount. This type of loan is helpful if you want lower monthly payments at first, but it can be risky because, in the end, you have to come up with a lot of money at once. If you can’t make that big payment or get a new loan, you might have trouble keeping the house. Balloon mortgages work best for people who know they’ll have the money or plan to sell the house in a few years.