Balloon Mortgages

Balloon mortgages are mortgages that seem good in the beginning, but could wind up becoming bad news in the future. The fact is, most people would not be better off with a balloon mortgage, but there are plenty of people who would be. Balloon mortgages have their good and bad points, and it's up to you to weigh these differences and determine if it's the right choice for you or not.

Are you interested in a Balloon Mortgage? Contact a lender in your area today.

With other types of mortgages, your mortgage payment each month consists of two things aside from things such as taxes and insurance: the amount that is interest, and the amount that goes toward your principle. These two components are the largest components of your payment and add up to your monthly payment. However, with a balloon mortgage, you are paying ONLY for the interest, and not at all toward the principle. In a way, it's almost like paying for rent: the money goes nowhere, but you have a place to live. The big difference, though, is how much lower your monthly payments will be. In the end, the home will be yours.

Benefits of Balloon Mortgages:

• The interest is usually lower
• Monthly payments are lower
• The interest is fixed
• The term is short, usually 3, 5, or 7 years
• Sometimes come with refinancing options

How much will you save exactly? This all depends on a number of a factors, such as how much your home costs, how long your mortgage term is, and your interest rate. Depending on these factors, your savings each month can be anywhere from $100 to a few a hundred dollars. So if you are paying interest each month, when do you pay the principle? You are expected to pay the principle (the entire cost of the home) all at once after a certain number of years. This is the perfect loan for you if you need low monthly payments for a few years, but you know for certain that you will have all of the cash available in the future for the value of your home.

Are you interested in a Balloon Mortgage? Contact a lender in your area today.