Balloon/reset mortgages for Veterans

Balloon/reset mortgages have monthly mortgage payments based on a 30-year amortization schedule, and you have a choice at the end of the 5- or 7-year term to either pay off the remaining balance or reset the mortgage. So you have the advantage of a low monthly payment, like someone with a 30-year loan, but you must pay off the loan at the end of the specified term.

Many balloon mortgages have a "reset" option. That means you can reset the interest rate of your mortgage to the current market rate for the remainder of the amortization period.

This option is typically only available if:

There are additional considerations to be aware of with balloon/reset mortgages:

What the numbers mean. There are 2 types of balloon/reset mortgages: 7/23 and 5/25. The two numbers together are the total number of years (30) the payments will be based on. The 1st number (7 or 5) is the number of years before the balloon maturity date. The 2nd number (23 or 25) is the balance of the term.