Balloon Loans How One Could Help You

Balloon Loans How One Could Help You



Balloon Loans - How One Could Help You
Today,​ there is​ a​ specific loan type for just about anything that you​ could need money for - whether short or​ long term .​
a​ balloon loan also has a​ specific purpose,​ and it​ could be what you​ are looking for if​ you​ are looking for something that is​ more of​ a​ short term than long term .​
Here are some ways that a​ balloon loan could help you.
A balloon loan,​ whether as​ a​ first or​ a​ second mortgage,​ is​ always set up for a​ 30-year span .​
This is​ so that there is​ a​ basis with which to​ calculate the​ payments .​
Your payments will always be what they should be to​ become fully amortized over the​ 30-year period .​
Balloon loans then are given a​ period of​ time,​ such as​ 5-year,​ or​ seven-year,​ or​ even a​ 15-year,​ in​ which they become due.
Balloon mortgages are usually fixed rate mortgages .​
The interest rate on​ a​ balloon mortgage is​ also a​ little lower,​ too,​ which reduces your monthly payments even lower,​ bringing even larger savings .​
There generally are not any limits on​ interest placed on​ refinancing,​ such as​ there might be with a​ 30-year ARM,​ so you​ will be refinanced at​ whatever is​ the​ current rate .​
Refinancing is​ simpler,​ though,​ and,​ if​ it​ is​ in​ your contract,​ you​ will not need to​ be requalified,​ or​ the​ property reassessed,​ and fees will usually be minimal.
When a​ balloon mortgage becomes due,​ then full payment is​ expected .​
However,​ because there is​ so much left to​ be paid,​ most people are required to​ refinance in​ order to​ pay the​ balloon mortgage off .​
Whatever the​ interest rate is​ at​ the​ time,​ is​ the​ rate that you​ will have to​ take – there is​ not much of​ an​ option here.
If you​ are looking to​ buy a​ house,​ and stay for a​ short term,​ either less than the​ typical 5,​ 7 or​ 15 years,​ then you​ have a​ real good way to​ save some money .​
a​ balloon loan allows you​ to​ enjoy the​ lower monthly payment rates,​ and you​ can sell it​ before the​ balloon payment becomes due .​
This gives you​ the​ perfect opportunity to​ buy an​ even a​ larger house for less .​
The only problem is​ if​ you​ decide you​ want to​ stay - then you​ must refinance.
Balloon mortgages are more commonly being used as​ a​ second mortgage now,​ in​ order to​ reduce monthly payments and save hundreds of​ dollars each year .​
If you​ do not have a​ 20% Downpayment when you​ apply for your mortgage,​ then you​ will be required to​ get private mortgage insurance (PMI) .​
You can avoid this by getting a​ piggyback loan,​ one for 80% (first mortgage) and the​ other for 20% (balloon loan),​ and then you​ will not need to​ get the​ costly and unnecessary PMI.
It is​ even possible to​ get a​ larger balloon loan if​ you​ get it​ against the​ equity built up in​ your house .​
Another option would be for the​ purpose of​ projects around the​ house in​ the​ way of​ construction and remodeling – especially if​ you​ want to​ do it​ before you​ sell .​
When applying for a​ balloon loan you​ want to​ be sure to​ check out the​ various fees and compare several potential mortgages in​ order to​ see which one has the​ best deal for you​ .​
Also make sure that you​ get one without any penalties for paying it​ off early.




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