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 balloon loan is a type of loan which does not fully amortize ...
  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. Term Loan

    A loan from a bank for a specific amount that has a specified ...
  5. Bullet Repayment

    A lump sum payment for the entire loan amount paid at maturity. ...
  6. Amortized Loan

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