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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.

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Steve Peroff - Sales Representative Re/Max Landmark Realty Inc. Brokerage 430 The Queensway South Keswick, ON. L4P 2E1 Direct line: 905-476-3131 Toll Free: 1-866-924-7496 Direct Fax: 905-476-7242 Fax: 905-476-8608 Email: steve@realestatekeswick.com Steve is a full-time Real Estate professional and a full-time resident of Keswick. Born and raised in Toronto, he was educated at Ryerson Polytechnical Institute in Business Administration and for many years in the school of "hard knocks" in Toronto's theatre community. As a Theatre Administrator, Steve had the fortunate opportunity of working with many high profile companies, entertainers and related service industries. It is through these experiences that Steve has created a successful real estate business. He credits a strong organizational background, marketing and advertising acumen and strong interpersonal skills with helping him attain the stature of Keswick's #1 Re/Max Sales Representative, a position he has maintained each and every year since 1990. www.RealEstateKeswick.com is brought to you by Team Peroff NUMBER1EXPERT™ in real estate for Keswick, Sutton and Georgina, Ontario, Waterfront, Lakefront Read Team Peroff's Privacy Guarantee, Terms of Service, and Free & Without Obligation Pledge

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