*Loan,banking and credit>>>mortgage loan

What is a baloon payment and how does it work in loan/mortgage?

A balloon mortgage is where you take say a 30 year mortgage...at least the payments you make are ammortized based on 30 years of payment, but after usually 5 or 10 years, the entire balance is due. So basically say you are paying your monthly payment for 10 years, the last, or balloon payment is the balance of the mortgage...a huge amount of money, depending on how big the loan was, but definately 10s of tousands of dollars! This is a mortgage that you will either have to refinance or have some plan to pay off rather quickly!

A large payment due on a specified date. Such as a 5 year balloon mortage = $10K due in 5 years, 2/15/12.
A balloon payment (meaning expanded) is a payment that is usually substantially hire that the regular monthly payments.

Ex:
$5,000,000 mtge over 30 years at 10% is $43130 /mth
The loan may stipulate that at the end of each 5th year you have to make a balloon payment of $500,000.
There are a number of reasons for doing this:
1) Forces companies to put some of their excess profit back into the company
2) Reduces debt at a faster pace
3) Limits the bank or lenders liability
etc..
When you buy a home , at the time the note on the house comes due there is a large payment due. This is called a baalloon payment, and you should be prepared to fork over a huge chunk of change. If you don't have it, tou stand to lose the house and all you have invested in it. If it's coming due soon and you don't have enough funds, try refinancing the loan.
A balloon payment is the final payment on a loan, where the last payment is larger than the periodic payment (monthly?) during the loan repayment period.
I would never recommend a loan that has a balloon payment.

You may have lower payments for this loan. You will pay your payments for the set amount of months, and whatever is left over that you have not payed (the balance of the loan after making all of your payments), you have to pay in one payment. This can be very high, thousands of dollars. You would probably have to refinance.

It's a scam.