7-Year Balloon

• 7-Year Balloon Mortgage

  The 7-Year Balloon with a conditional refinancing option may be a good alternative for customers. Monthly payments are attractive because they are based on a 30-year amortization, while yields are based on the shorter term of the loan. The conditional refinancing option provides a safety net, allowing borrowers to refinance at maturity with a 23-year fixed-rate mortgage, provided certain conditions are met.

  Lender Benefits

  • Lock in premium and/or discount pricing across a 50 basis point range in pass-thru rates.
    
  • Choice of either whole loan or MBS execution for delivery of loans refinanced at balloon maturity.
    
  • Fannie Mae assumes the risk of borrower default at balloon maturity.
    

  Consumer Benefits

  • Offers a lower cost fixed-rate financing alternative to 15- and 30-year fixed-rate mortgages.
    
  • Affordable monthly payments can be made even more attractive by pairing it with a temporary interest rate buy down.