Posted by Tim(OH) on May 24, 1999 at 15:56:26:
If you bought a house and gave a mortgage with a balloon payment, you come up with the balloon however you can, typically refinancing. You could get the refinancing from any number of sources such as a bank, a mortgage broker, from your own cash reserves etc.
Qualifying for refinaning is really not much different from qualifying when you first buy the house. They would take into consideration your credit rating and source of income like any other lender. The “Gamble” you are taking when you finance with a balloon payment is that you will have to keep your credit good so someone will loan you money, not to mention the chance that the cost of money may be much higher in five years then it I today.
As for factoring in the principal on a mortgage at 6%, you use either an amortization table or a financial calculator. Someone else has done the work for you
long ago. Amrotization tables are readily available in course books etc.
I’m no expert, but I hope this helps.
Tim(OH)