How Does a 15 Year Balloon Mortgage Work?

A 15 year balloon mortgage is a type of loan in which you will make principal and interest payments for 15 years. Then at the end of the 15 year term, you will have to pay a balloon payment that is equal to the amount of money that you still owe.

Amortization schedules

A typical loan will usually have a 30 year amortization schedule will have your payments based on a 30 year mortgage table. This makes your monthly payments very small when compared to what you would pay with a traditional 15 year mortgage. A 15 year mortgage is only for 15 years, so the payments are higher. After 15 years have passed, you will have paid off your loan.

Pros and Cons

The big benefit of using this type of loan is that it allows you to have flexibility when making your mortgage payment. You can get a much lower mortgage payment than you would ordinarily be able to get. The drawback of this type of loan is that you will have higher mortgage payments and may find yourself struggling in order to make the payments.

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