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| 5/25 Balloon Mortgage |
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Conforming 5/25 Balloon Mortgage (aka 5 year balloon)General Overview 5/25 Balloon mortgage - the rate is fixed for a period of 5 years and then converts to a new fixed rate for the remaining 25 years. The new rate is typically based on the Fannie Mae 60 day net yield index and is added to a pre-determined margin, usually 0.500. Note that converting to this new rate is permitted only if the prescribed conditions are met and if not, then the loan is due and payable to the lender as a balloon loan (review your loan documents carefully). The loan is fully amortized (or paid off) in 30 years if the normal payment schedule is followed. 5 year balloon and 5 year ARMS (fixed for first 5 years) Available!
The loan becomes due and payable after 60 months. However the borrower has the option to reset the loan provided the following conditions are met:
The new interest rate will be a fxied rate and is based on the FNMA 60 day net yield plus 0.5% rounded to the neartest one-eighth of one percent.
Click for current Mortgage Rates This loan is often confused with the 5/1 Adjustable Rate Mortgage (5/1 ARM) |
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