Balloon Equity loans
A balloon home equity loan usually has an interest rate that doesn't change over the term of the loan like a fixed rate home equity loan does. However, the loan term is shorter than the term used to calculate the monthly payment. For example, a balloon loan may have monthly payments that are calculated over a 30 year term but a loan term of 5 years. This means that monthly payments will be made for 5 years and the balance due must then be paid in one lump sum payment, sometimes called a "balloon payment".

When the balloon payment becomes due and the loan must be paid in full it is typical to refinance the mortgage.
 
[ Close This Window ]



© 2000 Quad City Virtual, Inc. All Rights Reserved.