hen buying a home and out of pocket).
evaluating your mortgage
loan options, you'll * Some balloon loans can be
likely encounter the term converted to a fixed-rate
"balloon loan." This type of loan mortgage loan at the end of the
allows you to make fixed payments original term. In such cases, the
for a certain period of time, but fixed-rate loan will take on
then requires you to pay off the current interest rates at the
remaining balance in one lump-sum time of conversion.
payment.
* A balloon loan may be a good
Key Points of the Balloon Loan: idea if you only plan to stay in
a house for five to seven years.
* The interest rate on a balloon It can save you money each month,
mortgage loan is almost always and if you sell the house before
lower than the interest rate on a the term ends, you'll avoid the
traditional 15- or 30-year lump sum payment.
mortgage loan. This is the
primary benefit offered by this Before deciding whether or not a
type of loan. balloon loan is right for you,
you should educate yourself on
* The result of the lower all of the loan types. It's also
interest rate, of course, is a a good idea to seek the advice of
lower overall monthly payment. a qualified, reputable mortgage
professional.
* Balloon mortgage loans usually
have a term of five to seven Conclusion:
years. After that, you must pay
off the remaining balance in full If you only plan to stay in a
(either by refinancing or paying home for a few years, a balloon
loan might be a good option for place for when the loan terms
you. In most cases, a balloon ends. Always seek the advice of a
loan will offer lower interest qualified mortgage professional.
rates than a conventional,
long-term loan. Educate yourself * Copyright 2006, Brandon
before choosing a balloon loan, Cornett.
and be sure to have a plan in
About the Author:
Brandon Cornett is the editor of http://HomeBuyingInstitute.com, one of the Internet's largest libraries of home buying information -- over 100 expert articles on home buying and home mortgage loans! Learn more at: http://www.homebuyinginstitute.com
