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December 03, 2005
Financial Functions : Balloon Loan Example
A balloon mortgage is a short loan, lasting five to seven years, but the payments are based on a term of 30 years. Balloon loans often have a lower interest rate, and can usually be easier to qualify for than the traditional 30 year mortgage. At the end of your loan term you will need to pay off your outstanding balance. This usually means a refinance, a home sale or a conversion to a traditional mortgage at the current interest rates.In the spreadsheet below, we use the PMT and FV functions to calculate the payments and final payment for a 7 year 8% balloon loan for $100,000.
Let us now revise this worksheet with a "what if" scenario - so easy with OOo Calc. let us sweeten the payment each month and see how it impacts our final payment due.
The worksheet for this example can be downloaded here (OO0 2.0)
Posted by Dave at December 3, 2005 04:24 PM