What is a balloon loan payment?


What is a balloon loan payment?

Mortgage Loans:

To purchase property or land, most people plan to repay a secured loan that allows them to acquire said property over a long period of time. This type of loan is called a mortgage and comes in different types of financial products that provide options for borrowers depending on their particular conditions.

Answer and Explanation:

A balloon loan payment is the last payment on a balloon loan that requires the borrower to pay the remaining balance.

A balloon loan is one where a low initial payment is offered that does not amortize the balance of the loan and then has the balance come due for the last payment. These types of loans are often taken as temporary loans while more secure financing is acquired by the borrower, and usually are refinanced before the balloon loan payment comes due.

Learn more about this topic:

Buying a House: Mortgage Types & Loan Length

from Finance 102: Personal Finance

Chapter 7 / Lesson 4

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