How Does a Balloon Loan Work for a Mortgage?

Video Transcript

"Hello. How does a balloon mortgage work? That is the subject of our discussion today. My name is Adriel Torres, I'm the owner of ultimatecredittoday.com. A balloon mortgage is basically just like a regular mortgage, except, that it's all due within a specified period of time. Compared to a thirty year mortgage, or regular mortgage, if you make your monthly payments every month for thirty years, there's nothing due because you paid the entire amount, which is your principle, and your interest. On a balloon note, the lender, or the investor, requires the entire amount of the loan due in a year to five. Typically no more than five years, and no less than one year. Some of these loans are for the most part, for investment purposes, where some investors will need the money right away just to build a project or buy a house and flip it then pay the balance. Again they work just like a mortgage, you make your monthly payments, but the only difference s, that the money is all due, the principle, is all due usually a year at the most, five. Again, that's how balloon mortgages work, my name is Adriel Torres, owner of ultimatecredittoday.com."