Can anyone explain to me the meaning of "Balloon Mortgage"? I'm a little confused. Thank you?

Question

Can anyone explain to me the meaning of "Balloon Mortgage"? I'm a little confused. Thank you?

Answer 1

A balloon mortgage has a "balloon" payment at some point in the payments.  Instead of a 15 or 30 year fixed payments for the life of the loan in a few years the remainder of the loan becomes due.  It's almost always a bad idea for a ordinary person.  The only way you might do one is if you know you will sell before the balloon mortgage erupts or that you know you will come into some substantial money before it erupts, or that you plan to refinance before it erupts.  The problem is life happens and people get stuck with these type loans and wind up be foreclosed on.  Don't do it.

Answer 2

A mortgage that has a "balloon" means there is a date at the end where a large payment is due that would pay off the mortgage.