0

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

V

W

X

Y

Z

Balloon Mortgage

Loan that features artificially low payments for a while-usually 3 to 5 years, with a large lump sum payment due at the end of the term.

In mortgages, these loans feature level monthly payments that will fully amortize it over a specified period, but then there's a balloon payment that's due at an earlier time.

For example, a balloon mortgage might have a 30-year amortization schedule, with the balloon (or remaining balance of the loan) due after 5 years.

Balloon mortgages are typically used by investors for property they expect to hold for only 3-5 years. When homeowners use them, they plan to refinance when the balloon comes due.

NEXT: Balloon Payment

Investor Library