Balloon mortgages

If you frequently relocate or are considering a move after a short time, a balloon loan might give you the best mortgage rate. They offer many of the same benefits as adjustable-rate mortgages, with the added benefit of being less risky. At the same time, they offer many of the same benefits as fixed-rate mortgages, with the added benefit of requiring less commitment. Read on to learn more about how a balloon mortgage might be the solution for which you’ve been looking.

Basically, balloon mortgages consist of an introductory period wherein monthly payments are made. These monthly payments are usually comparable to those of a thirty-year, fixed-rate mortgage. In other words, the payments are low.

This period typically lasts between five and seven years. After that, a large, lump sum (the remainder of the loan) becomes due. To repay this lump sum, borrowers have the option of selling the house, or refinancing for the best mortgage rate.

Balloon mortgages do not represent a large portion of the market, but they can provide the best mortgage rate for people who want low, stable payments and short-term commitment.