Yeah, the “I’ll just refi later” plan only works until it doesn’t. I’ve had clients get caught off guard when rates spiked or their job situation changed—suddenly that balloon payment feels a lot less theoretical. And you’re right, those closing costs sneak up on people. If your margin’s tight, a surprise fee can wipe out any benefit you thought you were getting. It’s not a bad tool for some situations, but you really need a solid exit plan (like, written in ink, not pencil). Otherwise, it’s a gamble that can get expensive fast.
If your margin’s tight, a surprise fee can wipe out any benefit you thought you were getting. It’s not a bad tool for some situations, but you really need a solid exit plan (like, written in in...
That “written in ink, not pencil” bit really hits home. I’ve seen folks get into balloon mortgages thinking they’ll just flip the property or refi before the payment comes due, but markets don’t always cooperate. What’s everyone’s backup plan if the house doesn’t sell as fast as expected? I’m curious if anyone here has actually had to ride out a balloon term longer than planned—did it end up being worth it, or was it more stress than savings?
I’ve actually been in that exact spot—thought I’d have a place sold in six months, but the market cooled off just as I listed. Ended up holding onto it for almost a year past the balloon date. Wasn’t fun, but I managed to negotiate a short-term extension with the lender (at a higher rate, of course). The stress was real, but I didn’t lose my shirt.
Honestly, I think a lot of folks underestimate how quickly things can shift. Having a backup plan written down—like you said, in ink—makes a world of difference. For me, I always run the numbers on what it’d look like to rent the place out if I can’t sell. Sometimes the rental market’s a decent safety net, sometimes not. But yeah, I’d say the savings from the balloon mortgage were eaten up by the extra costs and headaches in my case. Not a total disaster, but definitely not the slam dunk I’d hoped for.
Been there too—timing the market is way harder than people think. You did well not to panic and just dump the place at a loss. A few thoughts:
- Totally agree on backup plans. I’ve had to pivot to renting before, and sometimes it’s a lifesaver, sometimes it’s just more hassle.
- Balloon mortgages can look great on paper, but the “what if” scenarios are real. I’ve had one deal where the balloon date snuck up faster than expected, and suddenly I was scrambling for options.
- The higher rate on extensions stings, but at least you kept control of the asset. That’s huge.
- Curious—did you find that renting actually covered your costs, or was it more about damage control?
I still run numbers on balloon loans for flips, but honestly, unless I’m super confident about my exit, I usually pass these days. The stress just isn’t worth it unless there’s a big upside.
Balloon mortgages can look great on paper, but the “what if” scenarios are real.
Yeah, that’s what tripped me up. I figured I’d refi before the balloon, but rates shot up and suddenly it wasn’t so simple. Renting covered most of my costs, but not all—maintenance and vacancies ate into it. Honestly, unless you’re really sure about your exit, these loans feel like rolling the dice. Did anyone actually come out ahead with one of these lately?
