What is a balloon mortgage?

You can make these affordable payments for a while, but whatever outstanding balance is left when you reach the end of your loan term will be your balloon payment amount. → This type of balloon mortgage is sometimes referred to as an “X due in Y” mortgage (for example, “30 due in 15”). “X” is the amortization period and “Y” is the loan term.

Are balloon mortgages a good option?

Other mortgage options, such as conventional loans or FHA loans, may be better suited for those looking for lower monthly payments without the risk of a large balloon payment. A balloon mortgage is a type of home loan in which you make low or no monthly payments for a short term, usually five or seven years.

Are balloon mortgages risky?

Balloon mortgages can be risky for borrowers, as they may struggle to make the large payment due at the end of the loan term. Other mortgage options, such as conventional loans or FHA loans, may be better suited for those looking for lower monthly payments without the risk of a large balloon payment.