balloon payment

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Balloon Payment

The final (large) payment that repays all the remaining principal and interest of a partially amortized or unamortized loan. See: Bullet.

balloon payment

A final loan payment that is significantly larger than the payments preceding it. For example, a bond issuer may redeem 3% of the original issue each year for 20 years and then retire the remaining 40% in the year of maturity.

balloon payment

The full principal amount due at the end of a balloon mortgage.

References in periodicals archive ?
Currently, balloon payments are prohibited for HOEPA-covered loans having maturities of less than five years.
For example, a consumer may not understand that a loan with affordable monthly payments will not amortize the principal or that the consumer may have to refinance a balloon payment at additional cost.
The Board and HUD join in two recommendations to protect consumers who obtain HOEPA-covered loans; one addresses balloon payments, and the other addresses single-premium credit insurance.
These loans are made to appear attractive by monthly payments that are kept low, but they are often accompanied by a large balloon payment that the consumer must then refinance.
Of all of the provisions in section 2 of the bill, the substantive limitations on balloon payments, negative amortization, and prepayment penalties seem particularly focused on the problems associated with high-cost mortgages.
When the "dust settles," these borrowers may find that they have paid a high number of loan origination and broker points (often financed in the borrowed amount) and have agreed to a loan with an interest rate at the highest levels in the market--sometimes with monthly payments that even exceed their monthly income and often with a balloon payment due.

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