Types of Mortgages: Which One Is the Right One? When the homeowner approaches the lender and they begin the process of filling out the mortgage loan application, it is a very good idea to know what types of mortgages are available and the advantages and disadvantages for each of them.
Balloon mortgages should come with a lower interest rate than either fixed-rate or adjustable-rate mortgages, making them a cheaper loan for the right consumers. Those consumers who plan to live in a home for only a short period of time, might do well to take out a balloon mortgage.
With amortization, portions of the principal are periodically being repaid. With partial amortization, a balloon payment will still be.
A balloon mortgage is usually rather short, with a term of 5 years to 7 years, but the payment is based on a term of 30 years. They often have a lower interest rate,
Here's some of the details of the payments they could expect with a balloon mortgage as well as with 30- and 15-year fixed-rate home loans,
Balloon Loan Calculator. This tool figures a loan's monthly and balloon payments , based on the amount borrowed, the loan term and the annual interest rate.
Comparing a Balloon Mortgage to an ARM: It is useful to compare five and seven-year balloons with ARMs that have the same initial rate periods. Both offer a rate in the early years below that available on a fixed-rate mortgage, and both carry a risk of higher rates later on.
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Those in Seattle, however, will see their payments balloon by a staggering $449 a month. have increased 10% on average over the past year. Interest rates on a 30-year fixed-rate mortgage have.
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.
Mortgages come in many different varieties and if your situation is unusual, you may be best served by an unusual type of mortgage. One of these lesser-used mortgage types is known as a balloon mortgage, also referred to as a balloon payment mortgage.