A balloon mortgage is a mortgage loan with a fixed or floating interest rate for an initial time period (usually 10 – 15 years). After the initial time period, the buyer will pay the remaining mortgage balance in full or refinance it. Balloon mortgages often feature lower interest rates since the buyer repays the loan amount in 10 – 15 years. They are most commonly used to finance commercial real estate. Talk to a mortgage loan officer to decide if a balloon mortgage is right for you.