What is a distinguishing feature of a balloon mortgage?

A balloon mortgage is characterized by the requirement of a large final payment, known as the balloon payment, due at the end of the loan term. Typically, this type of mortgage features lower monthly payments compared to a traditional loan, as the payments primarily cover interest during the term and a portion of the principal. However, since the amortization period is usually longer than the actual term of the mortgage, the remaining principal balance becomes due in one lump sum at maturity. This distinct structure is what sets balloon mortgages apart from more conventional loans where payments are designed to pay off the entire balance over the term.

In contrast, equal monthly payments throughout the term are indicative of fully amortizing loans rather than balloon mortgages. Additionally, while refinancing options may be available under certain circumstances, a balloon mortgage is not inherently non-refinanceable. Lastly, balloon mortgages do not typically feature a very long repayment term; instead, they often have shorter terms like five to seven years, while the amortization schedule can extend over a longer period. Thus, the defining characteristic of a balloon mortgage is indeed the large final payment due at maturity.