Balloon Mortgage

A balloon mortgage is a type of loan where you make regularly scheduled payments, often covering interest and a portion of the principal, for a set period—usually 5 to 7 years. At the end of this term, the remaining balance, which can be quite large, becomes due all at once in a single "balloon" payment. This can be helpful if you expect your financial situation to improve by then or plan to refinance, but it also involves the risk of having to pay a substantial sum at once if you're unable to do so.