Balloon payment

The final lump-sum payment to pay off a balloon mortgage’s balance

The balance on a balloon mortgage is due in full typically between 5 to 7 years, after the day it starts. This last payment is a heap of money, and if you can’t pay it off, you do have the option to sell or refinance, even though interest rates might be high. If you don’t take any of these options, you’re risking foreclosure. Some balloon mortgages do allow you to extend the loan in exchange for a higher rate.

See: Balloon mortgage