It is called a balloon payment because it is a large lump sum payment. Balloon payments may occur at specific intervals through out the life of the loan or it can simply be a one-time payment due at the end of the loan. This type of loan is most commonly used with mortgage loans but it can be used on other types of loans as well.
There are major benefits to having this type of loan. The down payment amount is generally much smaller than a traditional mortgage. Usually, the interest rate is lower which translates into a smaller mortgage payment. This type of loan is ideal if you are wealthy, have considerable investments, or expect a windfall of money at some point in the future.

The problem with this type of financing is that the balloon payment becomes due whether you have planned and saved for it or not. More and more financial institutions are allowing Balloon Payment Mortgages to individuals who may or may not be able to meet the lump sum payments. If you have been caught in this situation and feel you are not going to be able to meet the deadline there is help available. This does not have to end up with you losing your home to foreclosure.
Talk to a loan modification specialist, a person who knows the law, understands the world of finance, and is not afraid to deal with your mortgage lender. This specialist deals with foreclosures every day and will be able to provide you with options that could ultimately save your home.

Even if you did not have the insight to utilize a loan modification specialist before you bought your home don’t delay in seeking that help now.