Setting up Balloon Loans

Setting up Balloon Loans

A balloon loan is a type of loan that does not fully amortize over its term. Since it is not fully amortized, a balloon payment is required at the end of the term to repay the remaining principal balance of the loan.
Original Term: this is the term from the first payment to the maturity/balloon date of the loan.
Amortized Term: this is the  term used to determine the P&I payment amount.
Example, if you have a 5 year balloon loan with a payment based on a 15 year amortization, the original term would be 60 and the amortized term would be 180.
Maturity Type: balloon
Maturity/Balloon date: are the same
Balloon Payment: should be left at $0.00, since there is no way to know what the balance will be on the balloon date, if curtailments are made, or if the loan is delinquent.

ArticleNumber:

000050225

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