Article: Balloon Or Reset Mortgage Loans - Understanding The Basics
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Balloon Or Reset Mortgage Loans - Understanding The Basics
A balloon mortgage, also called a reset mortgage, offers lower interest rates with the option in 5 or 7 years to pay off the balance or resent the loan. Considered more risky than an ARM since interest rates can jump significantly, it is a valid option for those expecting to move or interest rates to drop.
Balloon Mortgage Features
Balloon mortgages are based on a 30 year amortization schedule, but you only pay those payments for 5 or 7 years depending on your loan?s terms. At the end of that period, you are required to make a balloon payment for the rest of the principal or resent the mortgage at current interest rates. Some financing companies also offer the option of refinancing the home loan.
With its unique interest rate structure, you can ...
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