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Homeownership is the American Dream and it is a dream that belongs to everyone. When you decide to purchase a home, you are really signing on for a long term commitment. This commitment should start even before you begin looking at properties. When looking for a home, most people have already established a certain criteria that they want in a home. Does it have a basement? How many bedrooms and bathrooms does it have? What is the square footage of the home? What condition is the house in? Does it have a big backyard in a nice neighborhood and hundreds of other important questions. Just like a home, a home mortgage loan has many different variables too. There are different types of loans, different types of interest rates as well as different lengths of loans. This information is more important than finding that perfect house, because even the most perfect home in the best location can be a homeowners nightmare if the loan terms are not right.
A convertible balloon mortgage is a loan that has a fixed interest rate for a set term and then adjusts to an interest rate that your lender gives you for the remaining years. For example, lets say you have a 5/25 convertible mortgage loan - your interest rate would be fixed for the first 5 years and then readjusted for the remaining 25 years. The upside to this type of loan would be that you would have a lower fixed interest rate for the first 5 years. The downside or risk to this type of loan would be that interest rates would rise and then you would be forced to refinance or pay a higher interest rate for final 25 years. Interest rates may be low now, but at some point we all know interest rates will rise again. Increases in interest rates not only raise monthly mortgage payments, but they also increase the total amount of interest that you will pay over the life of the loan.
Use the Convertible Balloon Mortgage Calculator to look at the different scenarios with your home mortgage options. You will be able to calculate what your monthly mortgage payment would be for the initial years of the loan. Then see how much your monthly mortgage payment and how much total interest you will end up paying based on the interest rate that the loan may adjust to for the remaining years of the loan. Feel free to check out different loan scenarios, to help ensure that you get the mortgage that is right for you and your unique situation. |
Convertible Balloon
Mortgage Calculator |
| | Please enter the loan amount (e.g. 100000), the type of loan, interest rate (e.g. 4.25), monthly pre-payment (e.g. 1000) and the output type on the loan. |
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| * This calculator is considered reliable, but results cannot be guaranteed. |
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