Why Should You Avoid A Short Term Mortgage?
One reason to avoid a short term mortgage has to do with the loan program. There are short term mortgage that are designed such that the debt owed is paid off with the last payment. Some short term loans, however, are designed to give you low monthly payments in exchange for a massive payment at the end of the term. These are known as balloon payments, to wit, the vast majority of the amount borrowed comes due at the end of the loan. These balloon loans are very dangerous. If you get stuck at the end of the loan term, you either have to come up with hundreds of thousands of dollars or lose the property. Such loans are generally to be avoided unless you have a clear and definite exit strategy.