Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and the Yahoo Answers website is now in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Trending News
If I pay off the principal amount on a balloon mortgage early, what happens?
For example, if I borrow $10,000 on a 15 year term, and pay off the $10,000 principal in five years, is the loan considered paid off in full, or do I still owe $10,000?
One banker told me one thing, and one banker told me another... at the same bank.
2 Answers
- Steve DLv 78 years agoFavorite Answer
Assuming you also pay the interest that accumulates during that 5 years, you would be paid off. However, be careful as some loans have a pre-payment penalty.
- AnamaLv 78 years ago
http://www.mtgprofessor.com/early_payoff.htm
Hi, here is a great site that will most likely help you. You want to look at the terms of your loan and see if the balloon is refinanced at that time. You would want to look at early payoff terms and if you are accruing interest at that time, both for which you will need to prepare for.
If at all possible, I would go with a full refinance and the shorter amount of time, the better. We just refinanced to a 15 yr. and saved thousands of dollars and will have our mortgage paid off in half the time of the orig. mortgage.
About the banker's opinions, you will just want to go ahead and speak to the highest ranking person at the bank, and if still confused about what is best, talk to the regional manager about it. Since I can not personally evaluate your loan, and do not know the specific law in your area I would be hesitant to answer this question definitively, but I bet anything the manager can!
Good luck and congrats on the early pay off!