Posted on: 01st Oct, 2010 05:54 pm
bofa is modifying our loan and in the paperwork it mentions a balloon mortgage, what is a balloon mortgage?
hi psyg1230,
welcome to mortgage fit,
basically it is a short term loan with fixed interest rates.it has lower monthly payments as compared to traditional one but you have to pay a full amount of principle at the end of the loan.basically you are paying interest only on monthly basis.(you may add some principle as well to lower your burden)
this type of baloon loans are riskier for those who do not have any emergency fund requirement or do not have habit of saving on month to month basis.
so if you are considering to opt for a baloon payment make sure you put a small amount of money every month aside in savings account/money market account so that when the time comes to pay the large sum at the end of the loan you won't have to refinance the loan and you can keep the home.
feel free to ask any further query if you have.
dipa
welcome to mortgage fit,
basically it is a short term loan with fixed interest rates.it has lower monthly payments as compared to traditional one but you have to pay a full amount of principle at the end of the loan.basically you are paying interest only on monthly basis.(you may add some principle as well to lower your burden)
this type of baloon loans are riskier for those who do not have any emergency fund requirement or do not have habit of saving on month to month basis.
so if you are considering to opt for a baloon payment make sure you put a small amount of money every month aside in savings account/money market account so that when the time comes to pay the large sum at the end of the loan you won't have to refinance the loan and you can keep the home.
feel free to ask any further query if you have.
dipa