Bad credit mortgage financing BCMF logo
Home Bad Credit Property Mortgage Theory Lending Practices Mortgage Financing Alternate Financing Creative Financing Consolidate Debt Repair Bad Credit Credit Cards Mortgage Lenders Mortgage Articles Real Estate Ebooks
Amortized Loan
Budget Mortgage
Balloon Loan
Partial Amortized
Package Mortgage
Blanket Mortgage
Reverse Mortgage
Construction Loan
Purchase Money
FHA Programs
VA Program
Loan Points
 Balloon Loan

Balloon Loan Mortgage Lending Practices

A balloon loan is any loan which has a final payment that is larger than any of the previous payments on the loan. The final payment is called a balloon payment. The term loan described earlier is a type of balloon loan. Partially amortized loans, discussed next, are also a type of balloon loan. In the tight money markets of recent years, the use of balloon loans has increased considerably. Balloon loans with maturities as short as 3 to 5 years have been commonplace. This, in effect, gives the buyer (borrower) 3 to 5 years to find cheaper and longer-term financing elsewhere. If such financing does not materialize and the mortgage loan is not repaid on time, the lender, usually the seller, has the right to foreclose. The alternative is for the lender and borrower to agree to an extension of the loan, usually prevailing interest rates. 

Balloon Loan To Partially Amortized Loans