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Copyright © 2006 by Bob Schwartz San Diego real estate broker Certified Residential Specialist
Promotions Unlimited All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement. | | Blowing Up Bills With BalloonsBy Bob Schwartz, CRS, GRI, San Diego real estate broker
If you aren't familiar with options for financing, it is never too late to find out about them. Comprehending the different terms and having the ability to relate them to each other will help you to evade situations that are not financially possible. One of the terms that you should know is "balloons". This can either aid you financially, or cause you trouble. Understanding the details of how balloons work and using them to your advantage will give you the ability to select the right loan.
Balloons are used as tools to decrease monthly payments. It does this by consolidating a specific percentage of your loan each month. At the close of your entire loan, you will pay the additional percentage that is left. Generally, this will equal about half of the loan that you have.
You can work with balloons to your gain if you have the right finances in place. If you know that you will have a significant amount of money at the end of your loan term, then having a balloon can help you to save now and form your credibility with financial investments later.
If you aren't certain of your financial status and what it will be in a few years, then a balloon will most likely not help you. Because you will need to pay a large amount at the end, it can lead you into debt and won't help you to make an investment on another house in the future. In accordance with this, if you are making a particular amount now but know that you will be making more later, then you can use a balloon in order to stabilize your financial conditions.
By using a balloon, you will be put into a situation where your mortgage will expand to twice as much at the end of the term. This can be a gain or a disadvantage, depending on your situation. By understanding precisely how to seal the end of the balloon, you will be able to find the best financial options for your situation.
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