Blowing Up Bills With Balloons
July 27th, 2008 | 
Author: 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. 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. 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. This can be an advantage or a disadvantage, depending on your situation. 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
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.
Good info there friend, i’ve never come across this “ballon” theory before.
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..
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/
That is really helpful. I think more people need to be made aware of this. Thanks
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
“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
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.
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.
i’ve never hear “ballon” theory before. thank`s
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…
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.
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.
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
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.
Not to mention balloons are colorful and can spruce up a party. Oh wait.
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.
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.
I think the balloon theory will really work in dire circumstances.
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.
Good Advice. Might try with the balloon system to work on my finances.
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.
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
Hi
We offer balloon payments, to be honest they are not the most popular feature in our product range, but you are correct.
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….
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.
A simple yet very informative article.Honestly,i just heard the balloon financing term here and glad to learn more of it.
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.
Nice advice. Never heard of the balloon theory before but it sounds like something that’s worth looking into.
balloon payments, to be honest they are not the most popular feature
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I really enjoyed the theory!
hey vary good information .thank you for this
in this situation one will follow the balloon’s movement for his mortgage and his mortgage will go according to that movement. over all really a good and informative discussion.
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Balloon payments are never a good idea, if you’re uncertain of where you’ll be when the initial terms expire. On the other hand, they are great ideas for fixed periods when you know you’ll be moving on or changing plans.
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