Hence, $1,342.05 will be the monthly payment for the first 59 months, and borrowers will need to pay off whatever outstanding amount is left in month 60 when the balloon payment is due. We also need to use the loan terms in months instead of years. Since we need to use the monthly interest rate in decimal form, we have to first divide the interest rate by 12 and 100. A $250,000 mortgage with 5% interest, a 30-year term, and the balloon payment is due in 5 years. Let's take a look at an example of how to calculate balloon payment. ![]() At the end of the nth month, borrowers are required to pay back the outstanding mortgage amount. The above formula calculates the regular monthly payment for the balloon mortgage. The balloon payment formula is given below. The balloon payment is calculated just like a regular mortgage or loan payment except for the last balloon payment. They may need to borrow more money in the future to cover the payment for the balloon payment. Need more money - If circumference changes such as job loss or income cut, borrowers may not be able to pay off the balloon payment.Build equity slowly - Since the monthly payment is lower, the principal payment will also be lower, which means borrowers are building equity on their house much slower. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |