– Definition from Justipedia – A balloon mortgage is a mortgage that has a requirement that a large payment is due at the end of the repayment period to pay off the remaining balance. So, a balloon mortgage may have a fixed monthly payment with a set interest rate for eight years, and then the rest of the balance is due in the eighth year.
banking, mortgage. balloon payment. 1. A payment or instalment that is made at the end of a specified loan term to pay off the remaining principal. This payment is larger than the regular payments that are made throughout the term of the loan.
Unlike a fully-amortized mortgage, a balloon payment has a shorter-term than amortization period. That means when the term is up, the borrower will be left with a balance due to the lender – which is due as a last payment called a “balloon payment”.
Definition of balloon loan: Loan that requires a balloon payment, typically at the end of a loan period but sometimes at the beginning. balloon loans are arranged usually where a large inflow of cash is expected towards the end.
Home Mortgage Terms Conventional home mortgages eligible for sale and delivery to either the Federal National Mortgage Association (FNMA) or the Federal home loan mortgage corporation (FHLMC). Government A loan that is either backed by the Federal Housing Administration (FHA) or a VA loan for eligible service members and veterans.