What is an Balloon Mortgage?
Balloon mortgages are fixed for a certain period of time, typically five or seven years. After the initial fixed period, the mortgage balloons and become due in full. Most balloons offer a conversion to allow the mortgage to continue, however, it will normally convert at .625% above the Fannie Mae sixty-day mandatory yield for the balance of the term of the loan. in some cases, it does pay to just refinance. Balloons are sometimes referred to as 5/25 or 7/23 programs.
