A "balloon payment" is a larger than usual payment due at the end of a loan such as a mortgage.
One example of this would be an interest only mortgage - a mortgage where the capital borrowed is not paid off, only interest is paid. See my hub here for more about mortgages: http://cruncher.hubpages.com/hub/How-a-mortgage-works.
At the end of the loan the borrower would usually have to sell the house to pay back the loan or take out another loan, unless they have other savings that can pay off the loan.
A balloon payment is a large payment (and it can be formidably large) at the end of a loan. Often they will do that to keep the monthly payments lower, the WHAM a big one at the end of the loan. It is not a wise thing to do because it is easy to forget that payment and you could lose your collateral if you can't make the payment.
by Shepherd's Lamb15 months ago
I just want to discuss what's going on in my little head right now and hope to hear from those of you more educated on the subject.I qualified to buy a condo in 2004 (six years ago). I paid $6,000 cash for...
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I just refinanced my home mortgage today--4% for 15 years. Closing costs around $1,900. This is the lowest interest rate in 50 or so years.
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What is an interest credit?I have been paying a Sallie Mae loan for seven years and realized in September that I had only paid down $900 on a $8500 private education loan. After realizing this I started paying...
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