what is a balloon loan 
a balloon loan is a type of loan that does not fully amortize over its term since it is not fully amortized a balloon payment is required at the end of the term to repay the remaining balance of the loan 1balloon loans can be attractive to short term borrowers because they typically carry lower interest rates than loans with longer terms however the borrower must be aware of refinancing risks as there s a possibility the loan may reset at a higher interest rate 