The 5-30 Home Loan

As with many retail niches, the mortgage industry has a way of reintroducing products that have a bad name under new packaging. The 5-30 mortgage is one. What is it? Well, it is a loan that is amortized over 30 years. This means the monthly payments are calculated assuming you will have 30 years to pay the loan back. The 5, however, is the key. It means that at the end of 5 years, you have to suddenly pay back the entire amount of the loan. What does this really sound like? Yes, it is a balloon loan repackaged with a new name. Be very cautious with such loans.