A Balloon or resetting Orlando mortgage has a monthly mortgage payment based on a 30-year amortization plan, but the whole mortgage balance is due at the end of the 5- or 7-year term, unless you deside to reset your mortgage at the current rates. So you have the benifit of a low monthly payment, like someone with a 30-year loan, but you must pay off the loan at the end of the defined term or exercise your reset option at the end of the term. Many Orlando home buyers think of balloon or resetting mortgages as “two-step” mortgages.
Many balloon mortgages have a “reset” choice. That allows you to reset your mortgage interest rate at the market rate for the rest of the amortization period. This option is typically only available if:
- You’re still the owner and occupant of the Orlando home.
- You’ve paid your mortgage on time every time for at least a year prior to the balloon note maturity date.
- You have no other liens against the property.
- You’ve satisfied any other conditions of the reset.
You may also qualify to refinance your balloon/reset mortgage. There are additional things to be aware of with balloon/reset mortgages:
- If you plan to sell your Orlando home before the maturity date of the balloon/reset mortgage, this type of mortgage may be a good option. But, keep in mind that if you end up staying in your house when the loan matures, you will need to reset or refinance the mortgage.
- Balloon/reset mortgages usually come with a slightly lower initial rate than most other mortgage types. You may qualify for a larger loan amount with a balloon/reset mortgage than you would with an ARM or fixed-rate mortgage.
If interest rates increase during the term of the balloon loan, you may have a large increase in your monthly payments when you reset or refinance your mortgage.
Tags: Orlando Home, Orlando Mortgage
