Balloon Payments - What They Mean To You

Balloon Payments: What They Mean To You

In your research on home loans, you may have come across the term “balloon payment.” This usually refers to a large lump sum that is due after a certain period of time on a loan, and is part of the loan agreement. It usually appears on smaller second mortgages that are expected to be paid off more quickly. How exactly does a balloon payment work? It’s relatively simple.

Smaller Monthly Payments

When you take out a second mortgage or select an 80/20 loan as your main mortgage plan, that smaller mortgage ...

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