Borrowers taking a balloon payment mortgage most likely

Borrowers taking a balloon payment mortgage most likely:

1. Expect their income or financial situation to improve before the balloon payment is due, allowing them to either pay off the lump sum or refinance into a different loan.
2. Plan to sell the property before the balloon payment is due, thereby avoiding the need to pay the large lump sum.
3. Seek lower initial monthly payments compared to traditional fully amortizing loans, as balloon payment mortgages typically have lower monthly payments during the loan term.
4. Intend to refinance the mortgage before the balloon payment comes due, assuming they can qualify for new financing.

It’s important for borrowers to have a clear plan for managing the large payment at the end of the loan term, as failure to pay the balloon payment can result in foreclosure.

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