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Mortgage Calculators
Welcome > Resources > Mortgage Calculators > Balloon Mortgages ...

 

Are Balloon Mortgages For You?

A balloon mortgage can be an excellent option for many home buyers. 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. There is, however, a risk to consider. At the end of your loan term you will need to pay off your outstanding balance. This usually means you must refinance, sell your home or convert the balloon mortgage to a traditional mortgage at the current interest rates.

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Definitions

Mortgage amount
Original or expected balance for your mortgage.

Interest rate
Annual interest rate for this mortgage.

Term in years
The number of years over which you will repay this loan. The most common balloon mortgage terms are 5 years and 7 years. After the mortgage term is complete, you will then need to refinance or pay off the remaining balance.

Monthly payment
Monthly principal and interest payment (PI). The monthly payment is calculated using a 30 year term.

Total payments
Total of all monthly payments over the term of the balloon mortgage. This total payment amount assumes that there are no prepayments of principal.

Total interest
Total of all interest paid over the term of the balloon mortgage. This total interest amount assumes that there are no prepayments of principal.

Prepayment type
The frequency of prepayment. The options are: none, monthly, yearly, and one-time payment.

Prepayment amount
Amount that will be prepaid on your mortgage. This amount will be applied to the mortgage principal balance, based on the prepayment type.

Start with payment
This is the payment number that your prepayments will begin with. For a one time payment, this is the payment number that the single prepayment will be included in. All prepayments of principal are assumed to be received by your lender in time to be included in the following month's interest calculation.

Savings
Total amount of interest you will save by prepaying your mortgage.

The mortgage calculators are provided by KJE Computer Solutions, LLC and made available to NUMBER1EXPERT as self-help tools for your independent use and are not intended to provide investment advice. We can't guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.



Real Estate Tips
Accepting An Offer >A Tough Sale

Here is a situation that many buyers have experienced. After searching for weeks, you found the perfect home and you made a very low offer. The sellers responded with a counter-offer which was several thousand dollars lower than their asking price. You came back with a slightly higher bid, and they came down some more. After many days of back and forth, you finally reached a meeting of the minds, and you are very pleased with the results.

If you have driven a hard bargain in purchasing a house, be sensitive to the seller's feelings as the transaction proceeds. They may be suffering from the impact of a rough negotiation. Try to minimize any additional requests you might make of the sellers. As you move toward your closing date, keep in mind that the sellers may not share your elation. If you are considerate and avoid making excessive demands, you can help everyone walk away from the transaction feeling satisfied with the outcome.

See All Tips In The "Accepting An Offer" Category >
See Complete Library Of Hundreds Of Tips In 30+ Categories >

Real Estate Trivia
Q 
Where are the highest median price homes in the United States currently located?

A 
According to the NAR, the highest median price in the second quarter of 2005 was $726,900 for homes in California's San Francisco Bay area.
See More Real Estate Trivia >


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Christina Danley, REALTOR®, real estate agent and broker for Carmel, Pebble Beach, Pacific Grove and Monterey, California home listings, property and land for sale - NUMBER1EXPERT

Christina Danley
Sotheby's International Realty

200 Clocktower Suite 100D
Carmel, CA 93923
Cell: 831-601-5355
Fax: 831-855-0210
christina.danley@sothebyshomes.com

Christina Danley ranked in the top 5% for all Monterey Peninsula Sotheby's Real Estate Agents in 2009, and top 20% for 2008. Christina has been a broker associate since 1987. Christina earned the Certified Residential Specialist (CRS) designation, which distinguishes a higher level of education in real estate and a professional affiliation affording up-to-the-minute industry information and local market knowledge. She is the proud receiver of the John Leo Award, in recognition of top sales volume within the Monterey County Association of Realtors, for 1998. She holds a lifetime limited service credential for California Community Colleges and was honored with the Papa Vince award for excellence in hospitality.

CRS ePro Equal Housing REALTOR


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