The Fannie Mae balloon mortgage is a type of fixed-rate mortgage. Ideal if you plan to sell or refinance your home and want a low monthly payment during that time.

Balloon Mortgages

• The principal and interest you pay are amortized over a longer period (30 years) than the actual term of the mortgage.
• At the end of the balloon period, you may pay off the outstanding balance with a lump sum or exercise the option to refinance for the remaining term.
• The option to refinance is conditional, meaning you have to meet certain conditions (such as a history of timely payments or no second liens on your mortgage).
• The interest rate you pay on a balloon mortgage is usually lower than a comparable 30-year fixed-rate mortgage.
• The refinancing condition is not automatic - you must exercise the option.
• Refinancing conditions may include payment of closing costs and a lender fee, as well as no 30-day late payments in the previous 12 months and no other liens on your property.
• You must occupy your property at the time of refinancing.
• This mortgage can be used to buy one family, principal residences including condos and planned unit developments. Manufactured homes are also eligible. (Manufactured housing units must be built on a permanent chassis at a factory and then transported to a permanent site and attached to a foundation).

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