DEFINITION of 'Bullet Loan'

Any loan that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the balloon payment obligation.

BREAKING DOWN 'Bullet Loan'

These loans are riskier because the homeowner''s equity in the property doesn''t increase over time.

RELATED TERMS
  1. Balloon Loan

    A type of loan which does not fully amortize over its term. Since ...
  2. Balloon Payment

    An oversized payment due at the end of a mortgage, commercial ...
  3. Balloon Mortgage

    A type of short-term mortgage. Balloon mortgages require borrowers ...
  4. Bullet Repayment

    A lump sum payment for the entire loan amount paid at maturity. ...
  5. Interest Due

    The portion of a current mortgage payment that is comprised of ...
  6. Amortized Loan

    A loan with scheduled periodic payments of both principal and ...
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