By Bob Schwartz, CRS, GRI, San Diego real estate
broker
�2007
Broker For You
All rights reserved.
If you aren't familiar with options for financing, it is never too late to learn
about them. Comprehending 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
aid 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 pick
the right loan.
Balloons are used as means to lower monthly payments. It does this by
consolidating a particular percentage of your loan each month. At the finish of
your entire loan, you will pay the additional percentage that is left. Normally,
this will equal about half of the loan that you have.
You can work with balloons to your gain if you have the correct 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 develop
your credibility with financial investments later.
If you aren't confident 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 have to
pay a large amount at the end, it can steer you into debt and won't help you to
make an investment on another house later on. 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.
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 an advantage or a
disadvantage, depending on your situation. By knowing precisely how to close the
end of the balloon, you will be able to choose the best financial options for
your situation.
ABOUT THE AUTHOR
Bob Schwartz, is a Certified Residential Specialist, CA licensed real estate
broker with www.Brokerforyou.com. Bob
has over 27 years of residential real estate experience, authored a number of
published articles and served as an expert witness for
San Diego legal firms. You can contact Bob via
e-mail at brokerforyou@gmail.com or visit his highly popular
San Diego real estate website at:
http://www.brokerforyou.com
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