Balloon Mortgage

This type of mortgage can vary in length and types. For example, taking out a balloon mortgage can mean that you make monthly payments of both principal and interest or just monthly payments of interest only for a specified length of time. In both instances, when the loan comes due after that specified length of time, you must pay the entire balance of the original loan amount. They can be paid in one of two ways. The first way is the mortgage can be amortized over fifteen or thirty years and the home buyer pays the first five or ten years of the loan before paying off or refinancing the balance. The second payment method is to pay only the interest on the loan until the end of the loan period at which time they are responsible for the original amount of the loan.