With a balloon mortgage, you’ll enjoy the advantages of an interest rate lower than those on other loans with a large lump sum payment due at the end of your loan. This option may be appealing if you only plan to stay in your home for the short-term and plan to make the balloon payment when you sell.
If you go with this option, make sure you have made arrangements to finance the large balloon payment that will be due or that your loan has a conditional right to extend the loan at the end of the original term to a 30 year, fixed rate loan.