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Blowing Up Bills With Balloons

July 27th, 2008 |

If you aren’t familiar with options for financing, it is never too late to get started. Understanding the different terms and having the ability to relate them to each other will help you to avoid situations that are not financially possible. One of the terms that you should know is balloons. This can either help you financially, or cause you problems. Understanding the details of how balloons work and using them to your advantage will give you the ability to pop into the right loan.

Balloons are used as ways to lower monthly payments. It does this by consolidating a specific percentage of your loan each month. At the end of your entire loan, you will pay the additional percentage that is left. Usually, this will equal about fifty percent of the loan that you have.

You can work with balloons to your advantage if you have the right finances in place. If you know that you will have a large amount of money at the end of your loan term, then having a balloon can help you to save now and build your credibility with financial investments later.

If you aren’t certain of your financial status and what it will be in ten years, then a balloon will most likely not help you.Â Because you will be expecting to pay a large amount at the end, it can lead into debt and won’t help you to make an investment on another house in the future.Â In relation to this, if you are making a specific amount now but know that you will be making more later, then you can use a balloon in order to stabilize your financial conditions.Â

By using a balloon, you will be put into a situation where your mortgage will blow up to twice as much at the end of the term.Â This can be an advantage or a disadvantage, depending on your situation.Â By knowing exactly how to tie the end of the balloon, you will be able to find the best financial options for your situation.Â

Posted in Real Estate

35 Responses to “Blowing Up Bills With Balloons”

Wellness Hotel:
July 27th, 2008 4:58 pm

We arrived in the end about an hour late. She did tell us we could get the end and take the future to a balloon. A balloon for first time in the future.

Jamie:
August 17th, 2008 7:22 pm

Good info there friend, i’ve never come across this “ballon” theory before.

stocks:
September 13th, 2008 10:26 pm

Balloon payments can be pretty brutal, particularly on big ticket items like a car, sure it’s nice to pay a low amount over a 2 year lease, but then to be presented with a buyout option after the term for such a large amount of money can be spooky, and I think that is what scares most people off to balloon payments..

lifestyle:
September 29th, 2008 7:49 am

Hi,

Nice info bud - never heard of this balloon theory before. Would like to post it on my site life-styl.com too

Best Regards,
- life-styl
http://www.life-styl.com/index.php/category/stocks/

Kim:
September 29th, 2008 3:59 pm

That is really helpful. I think more people need to be made aware of this. Thanks

zncustombuilding:
October 5th, 2008 6:29 pm

well i’ve heard of the balloon theory before but never completely understood before…. thanks for the post i knew what it is all about

Jordans:
October 13th, 2008 9:34 pm

“By using a balloon, you will be put into a situation where your mortgage will blow up to twice as much at the end of the term” very very true

Secretarial jobs in media:
October 17th, 2008 8:55 am

It is a nice article on finance. I like your comprehensive content. mostly I like the that way where you have compare the mortgage with buying a balloon.

Air Jordans:
October 23rd, 2008 1:07 pm

This is the first time I heard about this balloon. This is advisable when you are expecting a large amount of money before the term ends or else you’re in big trouble.

gilagratisan:
October 25th, 2008 5:59 am

i’ve never hear “ballon” theory before. thank`s

Gadgetmaxim:
November 12th, 2008 2:30 pm

It seems you have given a very good analysis of our current situation. Nice to note that you have given it a name-the Balloon Theory…

Basketball Games:
December 4th, 2008 8:00 am

Good info for those who want to know the options for financing.After reading this thorough detail about balloons and its work, I am agree to say that it is really helpful in finance.

Student Loan Forgiveness:
December 23rd, 2008 3:31 pm

Balloons (ARMs) are dangerous! … especially now

I like Dave Ramey’s advice. Check out his MyTotalMoneyMakeover and Financial Peace University material. Also, listen to his daily radio program.

M Petrone:
January 3rd, 2009 5:19 pm

Another option to consider may be a mortgage refinance, with mortgage rates at an all time low, there is potential to save a lot of money. Good advice and info though, I will bookmark this page and come back

PAN:
January 5th, 2009 9:33 pm

Well I enjoyed reading the information about balloons, but the way I was familiar with the ‘balloon’ concept wasn’t necessarily positive. It was at the end of a car lease and the dealership was offering a balloon payment for ownership of the vehicle. Then I turned to a credit union for a loan on the car and fortunately it worked out. But it wasn’t associated with anything towards my benefit.

Henry:
February 9th, 2009 11:04 pm

Not to mention balloons are colorful and can spruce up a party. Oh wait.

Debt free:
February 28th, 2009 5:56 pm

I think the safest bet is a low fixed rate mortgage. That way you don’t have to worry about your mortgage payment going up.

Survival:
March 6th, 2009 9:02 pm

Thanks for posting this. Do you think that you will have a follow up post about this later? I think a lot of us are really learning something.

Mark:
March 17th, 2009 5:34 am

I think the balloon theory will really work in dire circumstances.

Birmingham Bankruptcy Lawyers:
March 18th, 2009 5:09 pm

Sound advice. Just remember that it’s easy to assume you’re going to have more money in the future to pay off the bubble. Unless you know for a fact that you’re good at not spending your saved up money, and you’ll have the cash, I would really think this through before taking the plunge.

Justin low:
March 19th, 2009 11:14 pm

Good Advice. Might try with the balloon system to work on my finances.

bob:
March 22nd, 2009 6:59 am

I swore I would never get into a contract with a balloon payment - but with buying a new place in this economy it made sense for me. I can buy property with less outflow of cash now and by the time my balloon is ready to “pop” conditions should be much improved. If not… then I’ve probably lost it all anyway.

Tony @ free sports betting picks:
April 1st, 2009 4:20 am

Thanks for the information about the balloon theory. Interesting information for a new couple starting out. Someone in their 20’s or 30’s seem would benefit most.

Tony

Asset Finance:
April 3rd, 2009 10:41 am

Hi

We offer balloon payments, to be honest they are not the most popular feature in our product range, but you are correct.

Rose from FineCraftGuild dot com:
April 5th, 2009 10:02 pm

I love that title! It sounds like a festive ending to debt and drama, however I prefer the conservative paying off early/larger over time payments, so we can sprinkle confetti later on….

Agency Financial Services:
May 1st, 2009 5:17 pm

Great information. I think balloon payments are very attractive due to their extremely low interest rates, but they are often viewed as being too risky for most first-time borrowers.

land rover spares:
May 24th, 2009 12:16 am

A simple yet very informative article.Honestly,i just heard the balloon financing term here and glad to learn more of it.

?ark? Dinle:
June 19th, 2009 8:53 am

That is really helpful. Might try with the balloon system to work on my finances.I think more people need to be made aware of this. Thank you very much.

Sanne:
August 26th, 2009 8:51 am

Nice advice. Never heard of the balloon theory before but it sounds like something that’s worth looking into.

lue:
October 9th, 2009 2:06 pm

balloon payments, to be honest they are not the most popular feature

Sound Bubble:
October 15th, 2009 7:35 am

While the world rejoices with green shoots becoming real greenbacks with the end of recession declared by the US Fed Chief, the world doesn’t look the same for the PE/VC industry. Reports on different aspects of the industry seems to indicate that the collapse of the financial system burnt more than the appetite to invest.

Forbes, for instance, reports that despite the life sciences industry being a picture of expanding horizons and confidence, the traditional providers of venture capital in the United States — university endowments and pension funds — whose assets have been reduced sharply over the last year in the collapse of financial markets, are pulling back. Even successful investors in the life sciences industry are staying away.

According to some reports, institutional investors of PE funds too are abandoning funds and going their own way since they feel that these funds just don’t have enough bandwidth or success to justify their high management fee.

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Blowing Up Bills With Balloons

35 Responses to “Blowing Up Bills With Balloons”

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