How are balloon payment mortgages different from traditional mortgages? check all that apply.

Balloon payment mortgages differ from traditional mortgages in several key ways. Here are the primary differences:

1. Large Final Payment:
   • Balloon Payment Mortgages: Require a significant lump-sum payment at the end of the loan term, often after a period of smaller, interest-only or partially amortized payments.
   • Traditional Mortgages: Typically fully amortized, meaning monthly payments cover both interest and principal, with no large lump-sum payment required at the end.
2. Shorter Loan Term:
   • Balloon Payment Mortgages: Generally have shorter terms, such as 5, 7, or 10 years, before the balloon payment is due.
   • Traditional Mortgages: Usually have longer terms, such as 15, 20, or 30 years.
3. Risk to Borrower:
   • Balloon Payment Mortgages: Higher risk due to the requirement to refinance, sell, or come up with the balloon payment at the end of the term.
   • Traditional Mortgages: Lower risk since payments are spread evenly over the life of the loan.
4. Lower Initial Payments:
   • Balloon Payment Mortgages: May offer lower monthly payments during the term because they are often interest-only or partially amortized.
   • Traditional Mortgages: Payments are higher as they include both interest and principal from the beginning.
5. Refinancing Requirement:
   • Balloon Payment Mortgages: Often require refinancing or selling the property to meet the balloon payment.
   • Traditional Mortgages: Refinancing is optional and not built into the loan structure.