Balloon payment mortgage Meaning and Definition
Balloon Payment Mortgage
Pronunciation
/ˈbælən pkeɪmənt mrɡɪdʒ/
Part of Speech
Noun
Definition
A type of mortgage in which the borrower makes a series of lower payments, with a large final payment, commonly known as a “balloon payment”, due at the end of the loan term.
Examples
- The homeowner took out a balloon payment mortgage to refinance their home.
- The balloon payment mortgage allowed the couple to buy their dream home, but they risked defaulting if they couldn’t make the final payment.
Etymology
The term “balloon payment” originated in the early 20th century, when mortgage lenders would include a large lump sum payment in the final installment of a loan.
Usage Notes
When using the term “balloon payment mortgage”, it’s essential to clarify that the borrower is aware of the significant final payment due at the end of the loan term.
Cultural References
The term “balloon payment mortgage” has been referenced in various films, TV shows, and literature, often to highlight the risks and challenges associated with such mortgage products.
Idiomatic Expressions or Phrases
“Balloon payment” is often used in idiomatic expressions, such as “making a balloon payment” to describe the final payment of a loan.
Related Words or Phrases
- Mortgage
- Loan
- Homeownership
Collocations
- Balloon payment mortgage loan
- Home financing
- Property investment
Frequency of Use
The term “balloon payment mortgage” is commonly used in financial and real estate contexts, but its frequency of use may vary depending on the region and industry.
Common Misspellings
- Balloon Payment Mortagage
- Baloon Payment Mortgage