![]() With their rising income, they will be able to afford a higher monthly payment after refinancing their mortgage. ![]() They can take advantage of the lower monthly payment initially and then refinance before the balloon payment is due. Rising Income - Borrowers who expect their income to rise sharply in the coming years may consider a balloon mortgage. There is no reason to pay higher fees and higher monthly payments for a traditional mortgage when these borrowers are looking to sell their house in a few years. Planning to Move - A balloon mortgage is useful for homeowners that are planning to move or relocate in a few years. Lower Overall Costs - The costs for financing a balloon mortgage are much lower than a traditional mortgage with a 30-year term because the mortgage is much shorter and borrowers will pay less in interest payments. Lower Monthly Payment - The monthly payment is lower for balloon mortgages because their interest rate is usually lower during the initial period than a fixed-interest mortgage or variable-interest mortgage. There are benefits and disadvantages of getting a balloon mortgage, following are the balloon mortgage pros and cons. However, a balloon mortgage could be risky as the lump sum payment due at the end of the term is a huge amount compared to the regular monthly payments. ![]() The homeowners are not looking to stay in the same house for 30 years. The interest rate is usually lower in the initial period compared to a fixed 30-year mortgage making them useful for homeowners who are only planning to stay in their homes for a short period of time. The balloon loan amortization schedule excel is downloadable.Ī balloon mortgage is a mortgage where the borrower is allowed to make low or interest-only payments initially and at the end, he is required to pay off the full balance in a lump sum.īalloon mortgages are usually for short-term borrowers who are expected to pay the lump sum in 5 to 7 years. Amortization Schedule With Balloon PaymentĪmortization schedule with balloon payment is useful for borrowers who need to calculate short term ballon loans.
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