Balloon Payment Mortgages
A balloon payment mortgage requires the borrower to make regular payments during the loan term followed by a large lump-sum payment of the remaining balance at maturity. This structure is common in Florida commercial lending.
Structure
Balloon mortgages typically amortize over 25-30 years but mature in 5-10 years. Monthly payments are calculated on the longer schedule, keeping them manageable. At maturity, the remaining balance (often 80-90% of the original loan) comes due as a single payment. The borrower must refinance, sell, or pay the balloon from other resources.
Refinancing Risk
The greatest risk for Florida balloon mortgage borrowers is the inability to refinance at maturity. Changes in property values, interest rates, lending standards, or the borrower's financial condition can make refinancing difficult or impossible. Florida borrowers should maintain strong credit, build equity, and begin the refinancing process well before the mortgage matures.
Related Terms
Barnes Walker Real Estate
Barnes Walker advises on mortgage structures for Florida borrowers and lenders. Contact us for financing guidance.
Florida Law Reference
Fla. Stat. Ch. 697
Defines mortgages as liens on real property and establishes requirements for mortgage creation, assignment, and satisfaction in Florida.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC