What is a Balloon Mortgage? - Definition
A Balloon Mortgage is a loan in which after a set term, the entire balance of the loan comes due. This type of loan generally has a lower interest rate, and has

a higher risk to the borrower. The loan can be done like an adjutable with a set term of 2,3,5,7,10 years. Or in a Home Equity Line of Credit, or Fixed Rate Second Mortgage where after a set period of time it becomes due. For example, a 30/15 Balloon is a second mortgage where the payment is based on 30 years, however the note becomes due after 15.