[Crimson Ghost]

A final payment of a mortgage loan is considerably larger than the required periodic payments if the loan amount was not fully amortized.

Home equity lines of credit are not fully amortized; the principal is not paid off over the life of the loan. These home equity lines of credit are set up for a "balloon payment". This is when the borrower has been paying only the interest, or some combination of interest and principal, and when the loan term expires the balance is due in full.

For example, if you borrow $15,000 and your monthly payments for 10 years have included only interest, you must pay $15,000 at the end of the term. You must be prepared to make this balloon payment by refinancing it with the lender, by obtaining a loan from another lender, by selling your home, or by some other means. If you are unable to make your balloon payment, you could lose your house.