Balloon Mortgage Calculator
This balloon mortgage calculator allows you to vary both the term and interest rate then calculates the mortgage balance owed (balloon) at the end of the payment term.
A balloon mortgage is usually rather short, with a term of 5 years to 7 years, but the payment is based on a term of 30 years. The advantage is they usually offer a lower interest rate and can be easier to qualify for than a traditional 30-year-fixed mortgage. However, beware of the risk because you will either need to refinance or pay off your outstanding balance at the end of the term.
When you are done calculating you can print an amortization schedule showing all payments and the final balloon.
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What Will Your Balloon Mortgage Payment Be At The End Of The Term?
Are you considering a balloon mortgage?
Would you like to know how much you’ll owe at the end of the term?
This Balloon Mortgage Calculator makes the math easy so you won’t be surprised when that final payment (the balloon) is due.
Simply enter your mortgage loan amount, annual interest rate (APR), desired monthly mortgage payment, and the number of years before the loan balloons. Compute the balloon at the end of the term and even print out an amortization schedule to keep for handy reference.
Below is everything you need to know about balloon mortgages before you sign up . . .
What Is A Balloon Mortgage?
A balloon mortgage is a mortgage in which a large portion of the borrowed principal is repaid in a single payment at the end of the loan period. This large payment is called the balloon payment.
Balloon mortgages are often used when a borrower expects a large cash inflow as a result of refinancing or selling the property before the end of the loan term.
Just like any other type of mortgage, this loan type also carries some risk. Before you decide to take such a loan, make sure you’ll be able to make the balloon payment before the due date.
How Does A Balloon Mortgage Work?
Balloon mortgages usually have lower interest rates and monthly payments than conventional, fully-amortizing, fixed-rate mortgages.
However, when making balloon mortgage payments, the majority of each payment will go toward interest, not principal.
That’s because while a balloon mortgage might last only seven years, the payments are calculated using a longer amortization period of 15 or 30 years.
Balloon mortgages are sometimes confused with adjustable-rate mortgages; however, they are very different.
The key characteristic of a balloon mortgage is a fixed loan term that is less than the amortization period creating a large, final, balloon payment.
The key characteristic of an adjustable rate mortgage (ARM) is that the interest rate can adjust up or down during the life of a full amortization period. The two loan types should never be confused.
What Are The Benefits?
Now that you understand how balloon mortgages work, consider the pros and cons to determine if a balloon mortgage is right for you:
What Are The Drawbacks?
There are several situations where balloon mortgages can be risky:
While balloon mortgages have low monthly payments, they can be a ticking time bomb – never forget about that large balloon payment at the end of the term.
If you are unsure that you will be able to handle the large payment at the end of the loan term, don’t apply for this mortgage.
Use this Balloon Mortgage Calculator to discover how much you’ll have to pay. If you feel hesitation in the slightest, consider a fixed-rate or adjustable-rate mortgage to reduce risk.
Balloon Mortgage Calculator Terms & Definitions
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