What is a balloon payment?
A balloon mortgage, on which you would make a balloon payment, typically has a short term of five to seven years. Your monthly payment amount, however, is based on a traditional 30-year mortgage term. Depending on the specific balloon mortgage type, you might be paying interest only on a combination of interest and principal each month. The key thing to remember about a balloon mortgage though is that at the end of said term, you’ll be responsible for making a lump-sum balloon payment for the balance of the loan.
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