Posted on: 06th Feb, 2007 06:47 pm
Have you heard of baloon mortgages that goes for 30 years?
And if so, are there penalties for refinancing within 2-3 years to a conventional?
And if so, are there penalties for refinancing within 2-3 years to a conventional?
hi walth,
welcome to the forums.
i haven't heard of any 30 year balloon mortgage. such a loan is offered for a short term after which it is refinanced into a 30 year fixed rate loan most often.
one can go for a balloon mortgage having a period of 3 years, 5 years or 7 years with a payment schedule calculated on the basis of a 30 year fixed rate loan. that is, the monthly payments on a balloon mortgage are often similar to that on a long term (25-30 years) fixed rate loan.
balloon mortgages having predetermined refinance option will not require you to pay penalty.
thanks,
sara
welcome to the forums.
i haven't heard of any 30 year balloon mortgage. such a loan is offered for a short term after which it is refinanced into a 30 year fixed rate loan most often.
one can go for a balloon mortgage having a period of 3 years, 5 years or 7 years with a payment schedule calculated on the basis of a 30 year fixed rate loan. that is, the monthly payments on a balloon mortgage are often similar to that on a long term (25-30 years) fixed rate loan.
balloon mortgages having predetermined refinance option will not require you to pay penalty.
thanks,
sara
Walth,
Thirty years must be the amortization term for the mortgage. In a 7/23 or 5/25 balloon mortgage, at the end of the 5 or 7 year term a person can select between paying off the remaining balance or reset the mortgage.
The reset option for the mortgage means that the borrower is allowed to reset the interest rate to the current market rate for the remaining amortization period.
But balloon mortgage for a term of 30 years must be some kind of fraud, as they generally do not exist.
Stosch
Thirty years must be the amortization term for the mortgage. In a 7/23 or 5/25 balloon mortgage, at the end of the 5 or 7 year term a person can select between paying off the remaining balance or reset the mortgage.
The reset option for the mortgage means that the borrower is allowed to reset the interest rate to the current market rate for the remaining amortization period.
But balloon mortgage for a term of 30 years must be some kind of fraud, as they generally do not exist.
Stosch
Hi Walth,
"And if so, are there penalties for refinancing within 2-3 years to a conventional?"
If your loan has a prepayment penalty then it must be mentioned in your mortgage document. You can also contact the lender and inquire about it.
Most balloon mortgages do have a prepayment penalty attached with them if you plan of refinancing within 2-3 years.
Colin
"And if so, are there penalties for refinancing within 2-3 years to a conventional?"
If your loan has a prepayment penalty then it must be mentioned in your mortgage document. You can also contact the lender and inquire about it.
Most balloon mortgages do have a prepayment penalty attached with them if you plan of refinancing within 2-3 years.
Colin