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Balloon Mortgages

Balloon Mortgages can be an excellent choice if you are looking for a lower interest rate and you will be in a home for a defined period. Balloon mortgages are generally available with fixed periods of either 5 or 7 years. Balloon mortgages are frequently described as a 5/25 or 7/23.  What sets balloon mortgages apart from an ARM (adjustable rate mortgage) is that after their fixed period, the interest rate on balloon mortgages will change only once while an ARM will continue to adjust on either a semi annual or annual basis. At the rate change, balloon mortgages interest rate generally will change to the prevailing 30 year fixed rate available at the time. Balloon mortgages are available up to the conforming limit which is currently $417,000. At the time of this writing, I am not aware of any lenders offering balloon mortgages in jumbo loan amounts. Email balloon mortgages questions.

Balloon Mortgages are available with as little as 5% down, but one of the issues with balloon mortgages is that most lenders will not make them available with a combination loan such as an 80/15/5 Balloon Mortgages so if you are putting less than 20% down you may have to pay balloon mortgages private mortgage insurance. However, PMI is a bit easier to deal with today than in the past. Effective January 1, 2007, PMI is tax deductible if your income is less than $100,000.

If you are looking at ARMs you really should ask about balloon mortgages pricing at the same time to make sure you are getting the mortgage product which best meets your specific situation. Balloon mortgages are frequently available at a lower interest rate than an ARM with a similar fixed period.

Many of my clients are converting from fully amortizing payments to an interest only mortgage approach with a significantly lower monthly payment and they are available for balloon mortgages. I have some extensive information available. Read more to see if this powerful tool could work for you.

Read more about balloon mortgages qualifying ratios.

Read more about Balloon Mortgages Closing Costs

Be sure to visit the Mortgage Library.

Read my new lock or float daily blog to see where rates are going

I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

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