A balloon note is a long-term mortgage loan that has one large payment (the balloon payment) due upon maturity. A balloon note will often have the advantage of very low interest payments, thus requiring very little capital outlay during the life of the loan. Since most of the repayment is deferred until the end of the payment period, the borrower has substantial flexibility to utilize the available capital during the life of the loan. The major problem with such a loan is that the borrower needs to be self-disciplined in preparing for the large single payment, since interim payments are not being made.
PROMISSORY NOTE (This is a Balloon Note) $_________________ (City and State where executed) (Date) The undersigned jointly and severally promise to pay to (Name of Lender) of (City, County, State), or order, the sum of (Amount of Loan) in lawful money of the United States of America at the home office of said Company, with interest thereon from date at the rate of _____ Percent (___.0%) per annum until paid. Said principal and interest is payable in (number) equal monthly installments of Principal and interest shall be due and payable at (Address of Lender), or at such other place as the Lender may designate, in (Number) consecutive monthly installments of &________________ on the first day of each month beginning on the first day of ________, 20___, and one final balloon payment $_________, which balloon payment shall be due and payable on (Date). The monthly principal and interest payments shall be based on a (e.g., 20) year amortization. Each monthly installment sha
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