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Call us at
706.571.0424 or 1.866.571.FMMC (3662) for a FREE Loan Analysis! |
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BALLOON MORTGAGES
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| Balloon loans are short term
mortgages that have some features of a fixed rate mortgage. The
loans provide a level payment feature during the term of the
loan, but as opposed to the 30 year fixed rate mortgage, balloon
loans do not fully amortize over the original term. Balloon
loans can have many types of maturities, but most balloons that
are first mortgages have a term of 5 to 7 years.
At the end of the loan term there is still a remaining
principal loan balance and the mortgage company generally
requires that the loan be paid in full, which can be
accomplished by refinancing. Many companies have other options
such as a conversion feature at the end of the term. For
example, the loan may convert to a 30 year fixed loan at the
thirty year market rate plus 3/8 of a percentage point. Your
conversion can be guaranteed based on certain criteria such as
having made your last 24 payments on time. The balloon mortgage
program with the conversion option is often called a 7/23
Convertible or 5/25 Convertible. |
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