Balloon Loan


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Balloon Loan

A loan or bond in which the borrower makes only interest payments for a set period of time. At the end of the term, the borrower repays the entire principal at once. A balloon loan may be useful when the borrower expects interest rates to be low at the end of the term, allowing him/her simply to refinance the loan. However, there is a high risk of default because not all borrowers actually have the cash to repay an entire loan in one payment. See also: Balloon Mortgage.
References in periodicals archive ?
Depending on the market and manufacturer, leasing and balloon loans can make up nearly 60% of total car sales.
Leases or balloon loans make up nearly 80% of those loans.
The pool is exposed to refinance risk over the next three years, with 11 balloon loans (44.
The increase in delinquencies was tempered by the resolution of 12 other previously delinquent assets, including extensions of two former matured balloon loans.
45 loan extensions were reported in May, including four former matured balloon loans.
For the month of March, 40 loan extensions were reported, including five former matured balloon loans.
The CREL delinquency index includes loans and assets that are 60 days or longer delinquent, matured balloon loans, and the current month's repurchased assets.
The mortgage loans in Group V are fully amortizing 15-year or balloon loans, originated by numerous originators; 50 percent of the loans were originated by Headlands Mortgage Securities, Inc.
In total, 42 loan extensions were reported in January, including six former matured balloon loans.
The mortgage loans in Group III are fully amortizing 15-year or balloon loans originated by numerous originators; approximately 45 percent were originated by Headlands Mortgage Securities Inc.
The extension of 14 matured balloon loans helped keep overall delinquencies in line with last month's total.