Balloon Mortgage and Balloon Payment are two terms that used very often to describe mortgages. Here are the definitions of these two words.
Balloon Mortgage: A mortgage with monthly payments often based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.
Balloon Payment: A final lump sum payment that is due, often at the maturity date of a balloon mortgage.
Balloon Mortgage: A mortgage with monthly payments often based on a 30-year amortization schedule, with the unpaid balance due in a lump sum payment at the end of a specific period of time (usually 5 or 7 years). The mortgage may contain an option to “reset” the interest rate to the current market rate and to extend the due date if certain conditions are met.
Balloon Payment: A final lump sum payment that is due, often at the maturity date of a balloon mortgage.
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