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Balloon Mortgage Loans

The Fauquier Bank offers balloon mortgage loans to Northern Virginia homebuyers in Fauquier and Prince William Counties. Since 1902, we’ve earned generations of customer loyalty for our personalized service and local expertise.

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What is a Balloon Loan?

Unlike conventional fixed-rate and adjustable-rate mortgage loans, in which monthly payments are calculated to fully pay off the principal balance by the end of the loan term, balloon loans are not fully amortized. They also tend to have shorter terms. You can make a lower monthly payment, as if for a 30-year term, until the end of the loan term. Then a “balloon payment” of the remaining principal balance will be due.

Balloon Mortgage Benefits

  • Lower monthly payments: As with a jumbo mortgage, a balloon loan can help you buy more house than you would otherwise be able to afford. Because the monthly payments mostly consist of interest, they are lower than a fully amortized mortgage.
  • Fixed payments: Your monthly balloon loan payments will stay the same, making it easier to budget, up until the final pay-off.
  • Good for Investors: Real estate investors often use balloon mortgages to purchase properties for renovation and sale or rental income. You can sell the property to pay off the loan before it “balloons” or refinance into a conventional or jumbo mortgage. 

When to Choose a Balloon Loan

Our Mortgage Loan Originators can help you find the best mortgage loan option to match your needs and budget. Balloon loans are great for real estate investors and other short-term borrowers who plan to sell the property or refinance the balloon loan before the end of its term. If you’re looking for other ways to save on interest and lower your monthly payments, an adjustable-rate mortgage is a good alternative.

Do more with The Fauquier Bank!

We are a proudly independent community bank with nine branch locations in Northern Virginia: Manassas, Haymarket, Bristow, Gainesville, Warrenton, The Plains, New Baltimore, Catlett, and Bealeton. As one of the only community banks serving Prince William and Fauquier counties, we reinvest our profits back into the local towns we serve. TFB mortgage customers can expect a personalized experience from beginning to end, as our friendly and knowledgeable Mortgage Loan Originators guide you through the application and closing process. To speak with a local mortgage lender, give us a call, chat with us or apply online, or visit your nearest TFB office. 

Balloon Loan FAQs

  • How does a balloon payment work?
    A balloon payment is the lump sum at the end of the loan term that pays off the remaining principal balance. You can either make the balloon payment in cash, sell the property to pay it off, or refinance your balloon loan into a conventional mortgage.
  • How do you calculate a balloon payment?
    The final payment on your balloon loan will depend on the loan’s rate and terms. Overall, you will have to make a lump sum payment that takes care of the remaining balance on the loan.
  • How do you refinance a balloon mortgage?
    To refinance a balloon mortgage, you need to take out a new home loan to pay off the existing balance. You can either refinance into another short-term loan or a longer-term conventional mortgage.

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