A lump sum payment made on a balloon note. This lump sum is the reason for the name “balloon” note, since this large, lump “balloon” sum is required to fully pay off the loan. Usually this payment is due at the end of the term of a note. In a balloon note, the periodic payments on the note are structured so that they do not fully amortize the loan, which requires the balloon payment to fully pay off the debt.
The Real Estate Encyclopedia & Blog
Balloon Payment
