Balloon mortgage loans have little monthly payments because you mainly pay for interests
and only at the end of the repayment program you have to make a balloon or lump payment to cancel the loans' principal. Sometimes, people can not afford this lump payment and therefore choose to refinance this amount. It is a great alternative to defaulting on the loan and thus risking repossession. Moreover, it is possible to refinance into a balloon loan from a regular mortgage loan to reduce your payments for some time as well as out of a mortgage loan as explained above.