Balloon loans are for those of us who have specific periods of time that we
will need the loan, We might want to buy a home For the short term and sell
It soon or we might have to take cash out of an existing, fix the home and
soon sell the home for a profit. Balloon loans allow you to get a very
low rate for only a short time. They typically last from 3 to 5or 7
years. A few go out till the 10 year mark. The important issue
is that at the end of your balloon...that's it! At the end of the balloon
loan terms, you must either pay off the loan or refinance the loan.
Your balloon is popped and you must move on to another loan. Now since
I have said that you "must" get another loan, there are a few lenders who
will allow you to keep the current loan but they have their own formula as
to what the new "adjusted rate" will be. It can be an unpleasant
surprise IF you are not prepared.
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