could some 1 explain to me a baloon mortgage? My wife refinanced before we were married, and in the year 2012, we are going to have to make a payment of 45k. Is there a way out of this? Currently there is -equity in the property, and no principal is going towards the mortgage. it's all interest. Should we sell? please help.

A 'Balloon Mortage' typically has very good (low) interest rate but all becomes due at some early date. With interest rates so low now, it is a great time to refinance with a conventional 30 or 15 year fixed rate mortgage. No need to sell if you can qualify for the new mortgage.

Thanks for your reply. I'm still in a bind here. The baloon mortgage was added after refinancing. The current interest rate is over 11%. So is it possible to refinance a 2nd time? I'm running out of answers. To pay off would be 60k. is that the best way to go? Thanks.

Tom,
You can still refinance your entire current package at cheaper lower rates. We just refinanced from a fix 30 at 6.25% down to a fixed 30 at 4.5% to take advantage of cutting our monthly payments in half.

Your existing first mortgage and second (baloon) mortgage will be paid off by the new mortgage when you close on the new loan.

the whole idea behind a balloon mortgage is to get a low rate initially and refinance later unless you do want to pay it off later. It is no big deal to refinance just talk to your mortgage broker and ask him what is the best way to go. If they are good at what they do and you trust them, they should steer you down the correct path. there are no real worries here

Thanks for the advice folks, Tom

11%! Yikes, did I hear that right? You might be able to get a 15-year for less than your current payment, WITHOUT the balloon looming at you!

It's interesting to me to go to a website that has amortization calculators (there are several), and run some scenarios. Take a look at how much you're paying now (interest and principal) vs. some alternative loans.

Sounds like refinancing could pay off nicely for you. Why pay all that interest if you don't have to!?

Plumber Tom, you need to get out of your current loan, whatever it takes. You indicate you are faced with a negative equity situation which may pose a problem. Still, you are paying 2 times the going rate. Even with poor credit and equity, you can beat that rate, eliminate the balloon and amortize that mortgage.

Barring that, sell it and come to California where plumbers make a great living. I got a job for you now! Need to get rid of a water softener and figure out what the deal is with this pressure tank on my system (public water).