Balloon Mortgage

A balloon mortgage has a lower rate and lower monthly payments than a fixed-rate mortgage. Like an ARM, a balloon loan can help you either save money each month or get a larger loan.

Monthly payments on a balloon loan are fixed for the five- or seven-year loan term. A final “balloon” payment for the entire remaining balance is due at the end of the term.

A balloon mortgage is a good option if you:

  • Only plan to stay in your home for five to seven years
  • Don’t expect rates to rise significantly before the loan matures
  • Expect to have the money to make the final payment at the balloon date
  • Want predictable monthly payments