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.
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.
Bargain Properties >Diamonds in the Rough
There are a lot of "diamonds in the rough" for sale. A property with incredible potential may be in a great location, have large sunny rooms and a big yard, but it may also have dated wall paper, worn carpeting, and uninspired bathrooms. If you can look beyond the surface, you may see a house that could be transformed by a little "elbow grease", paint, and new carpets.
A house that is structurally sound with all the systems in good condition may be only a few cosmetic repairs away from being fantastic! A home that does not show well is usually priced accordingly. If the price doesn't reflect the condition of the house, the seller may be more willing to negotiate than a seller who has made a considerable investment in preparing a home for the market.
Bring your imagination with you on your next house hunting trip! You may be pleasantly surprised to find a diamond in the rough.
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What is a "smart home"?
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A "smart home" is equipped with structured home wiring packages that control the home's systems via networked technologies. |
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Jolie Powell
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Jolie Powell Realty
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Jolie Powell has been a distinguished leader in the Real Estate industry since 1987. Prior to entering the world of Real Estate, Jolie had a successful career in advertising in Manhattan, New York. Always working to be at the top of her profession, Jolie has received her Certified International Property Specialist (CIPS) designation, Certified Buyer Representative (CBR) and Senior Real Estate Specialist (SRES) designations. Jolie also serves as Director of the Multiple Listing Service of Long Island and now elected as Zone Chairperson for the MLS.
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