Partially Amortizing Mortgages Partially amortizing mortgage loans require periodic payments of principal, as well as interest, but they are not paid off completely over the loan’s term to maturity. Instead, the loan has an amortization term longer than the term to maturity. The balance at maturity is called a balloon and is satisfied with a balloon payment.
Find the balloon payment on this mortgage loan: $100,000, 6.5 percent annual interest rate, monthly payments, 30-year amortization, but 7 – year term to maturity. There is a balance at the end of year 7. What options does the borrower have at that time?