Can you pay down the principal on balloon mortgage loans?

Balloon mortgage loans are arranged in order to pay the interest of a loan off in its entirety prior to applying any amount to the principal debt on the home. Even after years of repaying a balloon loan, you may have no equity in your house. In order to repay the debt early, then, you would still be on the hook for the entire initial loan sum. This has very little benefits to you since there are no savings if you repay the loan early. Rather, there may even be a penalty. Balloon mortgages are illegal in several states due to this unfavorable structure. 

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