Comfortable payments for 5–10 years, then the whole remaining balance lands at once. Model the monthly cost, the balloon and how much refinancing could save or cost.
The balloon term gives 30-year amortized payments on a short-duration loan.
Most of the principal is still owed on day one of the balloon. Refinance or sell — or scramble.
Appreciation usually bails out balloon buyers. See whether your home covers the balloon.
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