This is a special type of short term mortgage loan, based on traditional fixed-rate mortgage guidelines, with a low interest rate similar to an Adjustable Rate Mortgage.  Loan terms are usually fixed 5, 7 or 10 years, with principal and interest amortized over 30 years.  At the end of the balloon mortgage term (maturity date), a final lump sum payment is due for the remainder of the loan balance, called a "balloon payment".

Balloon Mortgage short terms financing mean relaxed lender guidelines for you the borrower(s) who don't qualify for traditional financing and need a solution to hold or purchase a home.  A balloon mortgage is also good for a home seller who has already moved into a new home and needs relief until a borrower is found, or when  market interest rates are high.

At the end of the 5, 7 or 10 year term, the borrower typically refinances for another balloon mortgage if rates are favorable or refinance to a fixed rate traditional mortgage.

The downside to a balloon mortgage is not being able to pay the balloon payment upon maturity.

Another downside is that refinancing may not be obtainable and the borrower defaults if the balloon payment can't be made, thus, loosing the home/property/real-estate, and all money paid to that point including escrows and equity.

Most Conventional loan products have Balloon options:

• HELOCS and Fixed Rate 2nds
• Conforming 30/7 Year Balloon Mortgage with 23-Year Refinance Option
• Streamline Refinance Owner-Occupied and Second Homes
• Certain 3, 5, 7, and 10 -Year ARM products
• 97% Program
• 2-Unit Mortgage
• 100% Mortgage
• 103% Mortgage

Our Balloon Mortgage for residential financing
For 1 - 4 family unit homes is a conforming 30/7 Year Balloon Mortgage with a 23-Year Refinance Option.

Meaning the balloon mortgage is amortized over 30 years with a balloon payment due in 7 years that can be converted to a fixed term encompassing the remaining 23 years.

If the fixed interest rate of the new refinance is more than five (5) percent above the current balloon interest rate, the Balloon loan will be due and payable at maturity. Highlights:

• No Minimum Loan Amount
• Owner-Occupied First Mortgage, Second Home, Investment

Effective for deliveries after January 1, 2003, the new MAXIMUM Loan Amounts limits for mortgages on one-to-four family properties will be as follows:

• $322,700 for mortgages on one-family properties (up from $300,700);
• $413,100 for mortgages on two-family properties (up from $384,900);
• $499,300 for mortgages on three-family properties (up from $465,200); and
• $620,500 for mortgages on four-family properties (up from $578,150).

 Ineligible Properties

• Manufactured homes
• Cooperatives
• Log homes

Commercial Balloon mortgages are not just common for new Commercial Properties, but are also ideal for Investment properties.  The above balloon mortgage limits are similar for commercial balloon mortgages except loan amounts typically exceed $500,000

Commercial property can have long term fixed rate financing.  Many commercial balloon mortgaged property owners are unaware that fixed rate loan financing is available, and are forever refinancing with Balloon mortgages.  Contact us for details.

For Commercial Mortgage industry...
see our page on CMBS (Commercial Mortgage Backed Securities)
2nd mortgages not allowed...we show a way around this


see Mezzanine Loans ...for Commercial Mortgage Loan Financing
How to get a Junior Lien (similar to second mortgage)