Balloon payment mortgage | Housing | Finance & Capital Markets | Khan Academy
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Finance and capital markets on Khan Academy: Most people buying a home need a mortgage to do so. This tutorial explains what a mortgage is and then actually does some math to figure out what your payments are (the last video is quite mathy so consider it optional).
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The balloon payment information was so useful. I have that type of loan now and the balloon is coming due in about two years. I don't think I'll have the money to pay it off so I'm just going to refinance the balloon loan. I never knew exactly what it was when I took out the loan. I just knew that at the end of the term I'd have to pay it off or refinance. Thanks again.
How refinancing it works.on ballon loan ? Can u explain please ?
Well explained..
thank you is very clear
Well explained
Question: Is one scenario that people opt for a balloon mortgage is that they plan to make extra principle payments during the term and pay off or almost pay off the principal balance on the mortgage?
That is smart to do and possible if the borrower gets the funds whether s//he applied or is paying a ballon in 7 or more years. Wikipedia gives a good explanation but am looking for a simpler one. If I get it I'll comeback to you but is basically a bigger total payment at the end of a term. I believe the benefits are, that the borrower has two terms, either the slow one in the long period which allow him/her to pay this mortgage at a lower pace or, the ballon (shorter term) which is convenient if s/he manages to put more of his/her earnings as principals, shortening the amortization period in which s/he has to pay interests, and once it hits that year, that payment feels like any other monthly payments. Like, if this person were paying mini or monthly balloons or inflated payments, it'll deflate of the total ballooned inflated total s/he owed still in 7 years term but yet, s/he raised the cash to clear it/to pay it. Hope that gives you an answer.
I went from wanting to cry and hide in a corner over a balloon payment to sounding like I own 3,000 rental units in 6 minutes and 8 seconds.
I love ur videos Man U explain this so much better than this crappy book
best explanation. thank you very much!
You never mentioned the interest rate. In your example,
Interest Rate = 3.956% with $7.35 Additional Principal each month.
Total Amount Paid = $406,759.42
Total Interest Paid = $106,759.42
Assuming Down Payment of $0
Balloon payment is unexpected payment??? Anyone knows about this???
Is expected. It'll be the remained principal owed in a piece of property in, let's say 7 years in which the borrower has the obligation to pay the rest of the principal owed on that building.
I have a question....Do we have to only pay $236,352 (balance of the Principal) at the end of 10 years? What about the 10 year interest on this amount?
+Gullu Dada You would be paying interest as usual. Your final payment would be accrued interest + the remaining principal.
damn. good thing homes in my area rarely hit 200k mark
Very well explained
amazing
I still don't understand what happens after that 10 year period... Do you still owe payments after you payback the full loan?
If you some how come up wth the loan balance, then no. What likely happens is that you will refinance the balance of the loan on the market.
Very well explained To the the way I learn best! Thank You Very Much! A lot of us are facing this option at this time with the Corona virus situation!
I wish you would of used numbers. I don’t understand how you pay off all the principle at the Balloon point and then/ why and how does the borrower still owe principal? Didn’t they pay off the principal?
*would've
Very well explained. What are you using to illustrate in real time?
Very informative, thank you!
Muchas gracias, excelente video
Khan, there's got to be a smarter explanation than that.
Amazing video! I have one question once the 10 year balloon loan comes to end do you pay the 236,352 plus interest?
since its still considered a 30 year amortization ?
i love you man
cool
ty
From public school to college, to now real estate school, thank you Sal!
What a waste of time
Very well explained. Thank you.