Finance
What is a 'balloon mortgage' and when might a Pennsylvania buyer encounter one?
AA mortgage with no monthly payments, with the entire amount due at the end of the term
BA short-term mortgage with regular amortizing payments followed by a large lump-sum payment of the remaining balance at the end of the term✓ Correct
CA mortgage that automatically converts to a fixed rate after 5 years
DA Pennsylvania PHFA loan product designed for buyers in rural areas
Explanation
A balloon mortgage features regular periodic payments (often based on a 30-year amortization schedule) for a shorter term — typically 5 to 7 years — after which the entire remaining principal balance is due in one large 'balloon' payment. Pennsylvania buyers might encounter balloon mortgages in commercial real estate financing, seller-financed transactions, or certain specialty residential products. Buyers must plan to refinance or sell before the balloon payment comes due to avoid default.
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