What does a loan saying 5 yr. balloon with 20 year amoritization mean?

Question

What does a loan saying 5 yr. balloon with 20 year amoritization mean?

Answer 1

20 Year amortization means that your payments are figured as if you would be paying off the loan with interest over 20 years.  

5 Year Balloon means that the loan balance that is left at the end of 5 years will be due and payable in one lump sum.

Unless you think you can make bigger payments than the 20 year amortized ones, or you can refinance the loan balance in 5 years, or will have enough to pay it off from your own funds be careful with this obligation.

Answer 2

the interest rate is fixed for five years, amortized over 20 years (meaning that you divide the loan amount by the rate by the years to get the interest portion)

if it is a true balloon note, then the whole loan is due in 5 years, most likely, you have an adjustable rate, which is different than a ballon note.