Balloon Payments

Commonly found in interest only mortgages or commercial loans.

A balloon mortgage payment is a lump sum due to the lender after a specified time on a loan. These terms can range from 2 years up to 20 years. This will vary on each lender's unique loan programs.

Balloon mortgage payments are extremely common on owner-carry back loans.

These types of loans are typically considered for short term investments / purchases. The rates can start lower than fixed, but you never know what the rate will be like when the balloon payment is due.

Related Article: Interest Only Mortgages >>