Balloon Mortgages

A balloon mortgage can be an excellent option for many home buyers. A balloon mortgage is usually rather short, with a term of five to seven years, but the payment is based on a term of 30 years. They often have a lower interest rate, and can be easier to qualify for than a traditional 30 year fixed mortgage. There is, however, a risk to consider. At the end of your loan term you will need to pay off your outstanding balance. This usually means you must refinance, sell your home or convert the balloon mortgage to a traditional mortgage at the current interest rates.

Balloon Mortgage Results

Your payment is MONTHLY_PI for TERM_BALLOON years with a rate of INTEREST_RATE.

**GRAPH**

Your payment of MONTHLY_PI is fixed for the TERM_BALLOON year term of your balloon mortgage. After REGULAR_PAYMENTS regular monthly payments you will have a balloon payment of BALLOON_PAYMENT that will need to be paid off or refinanced. (Your ending balance of BALLOON_PAYMENT does not include any prepayments.)

Mortgage Summary
Payments	REGULAR_PAYMENTS monthly payments of MONTHLY_PI 1 balloon payment of BALLOON_PAYMENT
Loan amount	LOAN_AMOUNT
Interest rate	INTEREST_RATE
Term	TERM_BALLOON years
Amortization period	TERM years
Total of regular payments	TOTAL_OF_PAYMENTS
Balloon payment	BALLOON_PAYMENT
Total interest paid	INTEREST_PAID

Prepayment Results

Principal prepayments on your mortgage can save you a great deal of interest. Below is a summary of your proposed prepayments for your balloon mortgage.

Prepayment Summary
Amount	PREPAY_AMOUNT PREPAY_TYPE
Start with payment	PREPAY_STARTS_WITH&NBSP;
Total payments	PREPAY_TOTAL_OF_PAYMENTS&NBSP;
Total interest	PREPAY_INTEREST_PAID&NBSP;
Interest savings	PREPAY_INTEREST_SAVINGS&NBSP;
Balloon payment	PREPAY_BALLOON_PAYMENT&NBSP;

Payment schedule

**REPEATING GROUP**

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Definitions

Mortgage amount
Original or expected balance for your mortgage.

Interest rate
Annual interest rate for this mortgage.

Term in years
The number of years over which you will repay this loan. The most common balloon mortgage terms are 5 years and 7 years. After the mortgage term is complete, you will then need to refinance or pay off the remaining balance.

Monthly payment
Monthly principal and interest payment (PI). The monthly payment is calculated using a 30 year term.

Total payments
Total of all monthly payments over the term of the balloon mortgage. This total payment amount assumes that there are no prepayments of principal.

Total interest
Total of all interest paid over the term of the balloon mortgage. This total interest amount assumes that there are no prepayments of principal.

Prepayment type
The frequency of prepayment. The options are none, monthly, yearly and one-time payment.

Prepayment amount
Amount that will be prepaid on your mortgage. This amount will be applied to the mortgage principal balance, based on the prepayment type.

Start with payment
This is the payment number that your prepayments will begin with. For a one-time payment, this is the payment number that the single prepayment will be included in. All prepayments of principal are assumed to be received by your lender in time to be included in the following month's interest calculation.

Savings
Total amount of interest you will save by prepaying your mortgage.