Balloon Payments

Balloon Payment:

A balloon payment occurs when at the end of the loan you still have a balance and are required to pay it off in a lump sum. This is relatively uncommon on first loans, but is seen frequently on fixed seconds. A 30/15 for example is a loan amortized over 30 years but due in fifteen. This feature helps minimize your monthly payment, but requires an exit strategy. Make sure you know the exact amount that will be required of you should this balloon payment become due.

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