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Programs

Conforming 7/23 Balloon Mortgage

General Overview
7/23 Balloon mortgage - the rate is fixed for a period of 7 years and then converts to a new fixed rate for the remaining 23 years. The new rate is typically based on the Fannie Mae 60 day net yield index and is added to a pre-determined margin, usually 0.500. Note that converting to this new rate is permitted only if the prescribed conditions are met and if not, then the loan is due and payable to the lender as a balloon loan (review your loan documents carefully). The loan is fully amortized (or paid off) in 30 years if the normal payment schedule is followed.

Fannie Mae & Jumbo Mortgage Rates

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The loan becomes due and payable after 84 months. However the borrower has the option to reset the loan provided the following conditions are met:

• Monthly payments are current and no payment has been more than 30 days late for the 12 month period prior to the maturity date; and
• No subordinate financing exists; and
• Borrower makes a written request to the servicer no more than 45 days prior to the balloon maturity date; and
• Borrower pays a processing fee, title search fee.

The new interest rate will be a fixed rate and is based on the FNMA 60 day net yield plus 0.5% rounded to the neartest one-eighth of one percent.

NOTE: If the new interest rate exceeds the old interest rate by more than 5% then the borrower may not exercise the reset option.

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This loan is often confused with the 7/1 Adjustable Rate Mortgage (7/1 ARM)