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.
Balloon Mortgage Payment
What Is A Balloon Mortgage?
A balloon loan is a type of short-term mortgage whose amortization schedule includes a final payment that is typically larger at the end of the loan term. This large payment is called the balloon payment. Balloon mortgage payment is 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 types of mortgage, this loan type also carries some risk. Before you decide to take such loan, it is essential that you can raise the balloon payment before the due date. Use the above mortgage calculator to determine what is the estimated balloon payment for your mortgage.
How Does Balloon Mortgage Work?
The interest rates and monthly payments are usually lower compared to the normal loans. However, a large portion or all of your payments will be applied towards the interest unlike in a regular loan where your monthly payment is allocated between the principal and the interest. In the normal loan, the principal balance will reduce as you keep making payments. On the other hand, for a balloon mortgage loan, the principal amount borrowed will be paid off at once at the end of the loan term.
What Are The Benefits?
What Are The Drawbacks?
Balloon mortgage payments can be very attractive to borrowers because of the low monthly repayments, but the risk associated with this type of loan is also very high because of the higher probability that you will not be able to pay the full final payment. If you are unsure that you will be able to handle the large payment at the end of the loan term, it is therefore not advisable to apply for this loan. To give you a better picture if you can afford this type of loan payment, calculate the balloon mortgage payment using the above calculator. Assess the advantages and disadvantages according to your financial situation before making any decision.
Balloon Mortgage Payment Terms and Definitions
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