Balloon Mortgage

A mortgage with a fixed amortization term for a fixed period of time. At the end of the time period, all of the outstanding balance (a balloon payment) is due prior to the actual amortization for that loan period. For example:

FNMA 7/23 Program - For the first seven years of the loan, payments are made as if they are financed over 30 years at a rate lower than the current market rate. At the end of seven years, a Balloon Payment could be made, or the remaining principle could be refinanced at the current rate over a new time period.