Ken Venick

Phone: 443-471-4310

ken@kenvenick.com

Owings Mills & Lutherville Mortgage
  • Home
  • About Me
  • Testimonials
  • Mortgage FAQ
  • Mortgage Blog
  • Videos
  • Contact
  • Mortgage Calculator
  • Apply Now
Owings
  • Home
  • About Me
  • Testimonials
  • Mortgage FAQ
  • Mortgage Blog
  • Videos
  • Contact
  • Mortgage Calculator
  • Apply Now
  • Home
  • Uncategorized
  • Blog
  • What is a Balloon Mortgage and How Does It Work?

What is a Balloon Mortgage and How Does It Work?

July 1, 2020Leave a Comment Written by Ken Venick

There are various mortgage options to consider when it comes to home financing, from conventional loans to government loans. In addition, you can also choose length of terms, and fixed or adjustable rates. Another option you can choose is what we call a balloon mortgage. 

 

What is a balloon mortgage? 

A balloon loan is financing that includes a lump sum payment schedule at any point in the term, although it’s usually at the end. There are two routes you can go here: the first is an interest-only loan, where you make interest payments, and then the entire balance is due at the end. The second is a combination where the balance and interest payments lead to a smaller lump-sum payment at the end. 

The one thing to know about balloon loans (no matter what kind), is that they don’t pay off fully through regular monthly payments, and you should prepare yourself to deal with a lump sum payment at the end.  

 

How does a balloon mortgage differ from other mortgages? 

While other loans fully pay off at the end of the loan, a balloon loan has a lump sum payment at the end of the loan (and isn’t fully paid off). The schedule for which these loans are paid off is called an amortization schedule. In a nutshell, the schedule will show you how much of your monthly payments are going towards interest and how much goes towards the balance of the loan. This is the case whether it’s fixed or adjustable.

 

What are the advantages of a balloon loan? 

Balloon loans definitely have their disadvantages, but there are some perks that are highly beneficial given the circumstances. The benefits to a balloon loan are:

 

  • Lower monthly payments 
  • Not having to pay a large payment for several years 
  • You can afford a home quicker
  • It gives you time to get your finances in order
  • You’re setting yourself up for a shorter-term mortgage

 

What are the disadvantages of a balloon loan? 

There are unfortunately a number of downsides to balloon loans, the main reasons being:

 

  • It’s higher risk for buyers and lenders
  • Potential for market change
  • Qualified mortgage loans usually have better rates 
  • Might be more difficult to refinance 

 

Is a balloon mortgage right for me? 

A balloon mortgage might be a good fit for you based on the advantages listed above. But if the disadvantages outweigh the good, you might want to reconsider. While it’s a good option for some, the big backend payment is a tough pill to swallow. This type of mortgage might be suitable for you if you are able to pay off the back part of the loan and you’re getting a mortgage because you’re investing your money in other things right now.

Are you ready to get the ball rolling on your mortgage? Do you have questions about whether a balloon mortgage is right for you? The team at Equity Mortgage can help! Contact us online, or give us a call at (443) 471-4310.

Blog, Uncategorized
balloon mortgage, Baltimore Mortgage, Ken Venick, Mortgage
Essential Questions To Ask Your Mortgage Broker
What COVID-19 Means for Your Mortgage

Leave a Reply Cancel reply

You must be logged in to post a comment.

Ken Venick

NMLS 138175

Equity Mortgage

NMLS# 128519

66 Painters Mill Road Suite 202
Owings Mills, MD 21117
Phone: 443-471-4310
ken@kenvenick.com
Licensed in Maryland, Delaware, Washington DC, Pennsylvania, New Jersey, North Carolina and Florida

Follow Us

Visit Us On FacebookVisit Us On InstagramVisit Us On LinkedinVisit Us On Youtube

Request Your FREE Consultation Today!

    Is Your Credit Score Where You Need it to be?

    Is Your Credit Score Where You Need it to be?

    April 2, 2016

    Credit Score

    All About Credit Scores There’s a lot that is calculated into your credit score. If it’s not where you’d like it to be, we can help you to understand what you need to do to get it there. The first, and most important, number to understand is your actual score, and where it falls on […]

    Credit Card Payments credit score FICO Score Ken Venick Market Trends Maryland Owings Mills and Lutherville Mortgage Real Estate

    read more

    When to Refinance your Mortgage

    When to Refinance your Mortgage

    April 4, 2016

    Mortgage Refinance

    There are many reasons why someone would refinance a mortgage.  Some of those reasons could be: to replace an adjustable rate mortgage with a fixed rate, to settle a divorce or to eliminate FHA mortgage insurance.  Some people choose to refinance because they could save thousands with a new interest rate altogether.  Others do so […]

    read more

    Adjustable vs. Fixed-Rate Mortgage

    Adjustable vs. Fixed-Rate Mortgage

    April 4, 2016

    Interest Rates

    Differences Between Adjustable vs. Fixed-Rate Mortgage There are two types of mortgage interest rates, and your monthly payment can change drastically depending on which you choose. A fixed-rate mortgage is just that – a rate that doesn’t change. The most common terms for fixed-rate borrowers are 30 years and 15 years, but 10 and 20 […]

    Adjustable Mortgage ARM Fixed-Rate Mortgage Home Market Trends Ken Venick Loans Mortgage Payments Mortgages Real Estate

    read more

    203k Loans and Renovating Without Equity

    203k Loans and Renovating Without Equity

    April 4, 2016

    203k Loans Equity Renovation

    A 203k loan is a renovation loan for your home.  If you want to buy a fixer upper, or you just want to remodel your current home, this is the type of loan that will help you to afford it. You can buy a home or refinance your current mortgage with this loan and it […]

    Construction Loan Consumer Loans Home Market Trends Home Renovation Ken Venick Loans Mortgage Refinance Mortgages Real Estate

    read more

    Hear Ken on AHA Business Radio

    Hear Ken on AHA Business Radio

    June 23, 2016

    Equity Interest Rates

    Click the “play” button below to catch Ken Venick’s interview on AHA Business Radio! Ken shares his insights about the importance of maintaining your credit levels, about mortgage interest rates and about qualifying for a mortgage. If you have any questions, or any trouble understanding mortgage finance, listen here for Ken to clear things up:  

    AHA Business Radio Credit Cards Home Market Trends Ken Venick Mortgage Financing Mortgages Radio Interview Real Estate

    read more

    Owings Mills Mortgage Rates - Owings Mills Market Update

    Owings Mills Mortgage Rates - Owings Mills Market Update

    June 19, 2017

    Mortgage

    How are Owings Mills mortgage rates affected by the national and local real estate market? How does the local real estate market effect my financing options as a buyer? As an Owings Mills mortgage lender, I pride myself on helping my clients discover the answers to these and numerous other questions. I believe that accurate, […]

    Buy a Home dream home Ken Venick Loans Mortgage Rates Mortgages Owings Mills and Lutherville Mortgage Real Estate Market

    read more

    Weekly Review - Week of June 19th

    Weekly Review - Week of June 19th

    June 20, 2017

    Mortgage

    The stock market ended the week in “mixed” fashion with the NASDAQ Composite Index underperforming as investors locked in some profits in high-flying large-cap technology stocks. Selling was particularly noticeable in the so-called FAANG stocks – Facebook, Amazon, Apple, Netflix, and Google (Alphabet) that represent $2.36 trillion in market capitalization. Meanwhile, the Dow Jones Industrial […]

    Bond Prices Home Market News Housing Reports Market Updates Mortgages owings mills mortgage Refinancing

    read more

    The FHA 203(k) Rehabilitation Mortgage

    The FHA 203(k) Rehabilitation Mortgage

    June 21, 2017

    Mortgage

    The FHA 203(k) Rehabilitation Mortgage is an easy to use mortgage program specifically designed for those who wish to make improvements on an owner-occupied home they own or would like to buy. Rather than having to obtain a separate loan to finance the cost of repairs (or walking away from a home they love because […]

    read more

    Your Guide To Renovation Loans

    Your Guide To Renovation Loans

    June 21, 2017

    Mortgage

    Popular Types of Renovation Loans Renovation Loans are used to purchase or refinance a home in need of repairs. The cost of the repairs is bundled into the mortgage, making it simpler and easier to pay for needed home rehabilitation. WHAT TYPES OF HOMES MAY BENEFIT FROM RENOVATION LOANS? Distressed Properties Those that were in […]

    Fannie Mae Homestyle Renovation Loan FHA One-Time Close FHA Rehabilitation Loan FHA Repair Escrow Loan Fixer Upper Homes Home Buying Tips Home Improvements Home Repairs Lutherville Mortgage Lender Old Homes renovation loans

    read more

    Top Reasons to Buy a Home

    Top Reasons to Buy a Home

    July 24, 2017

    Mortgage

    Benefits and Reasons to Buy a Home As an experienced Owings Mills mortgage lender, I am proud to have helped countless individuals and families accomplish their dreams of affordable home ownership. Throughout my experience, I have come across clients with a number of different reasons for finally making the decision to purchase their own home. […]

    Buying a Home Finances Home Equity Home Market Trends Lutherville Mortgage Lenders Mortgage Payments Mortgages Purchasing a Home Real Estate Renting

    read more

    get_footer();