what happens if you can t pay your balloon payment 
defaulting on your balloon payment is the same as defaulting on any loan it can lead to foreclosure and repossession of property defaulting will ruin your credit rating making it harder to borrow in the future 4can you refinance a balloon loan yes many people plan to refinance a balloon loan before the balloon payment is due to take advantage of the more affordable initial interest only period hoping that interest rates will be more favorable later this is risky however interest rates are volatile and you may end up refinancing for a higher rate than if you had chosen a fixed interest rate loan in the first place the bottom lineballoon loans can offer flexibility in the initial loan period by providing a low payment still borrowers should have a plan to pay the remaining balance or refinance before the payment comes due these loans do have their place for those who only need to borrow for a short time they can offer significant savings be realistic about your loan needs before borrowing 