Definitions for "Balloon Payments"
The final payment of a mortgage, which is larger than the regular payment and usually extinguishes the debt.
Balloon payment loans are structured in a way where there are monthly payments for a specific period of time and then one final, large (or "balloon") payment for the remainder. These are often used by individuals who have money tied up in investments and just need a loan for two to three years, or for those purchasing investment properties, where they are likely to resell the home in two to three years before the balloon payments hit.
() A payment or payments made to the principal over and above the required payment(s).