A balloon mortgage is normally a much shorter term than an adjustable mortgage or a fixed mortgage. Your monthly payments are also lower because you are only paying off interest. However, at the end of the term, you will have a big payment that will need to be paid since you were only paying off the interest before. Therefore, balloon mortgages are really good if you plan on selling the home before the end of the term of the loan. If you do not sell beforehand, you will need to either come up with the money to pay at the end of the term, or refinance the large unpaid balance for which you will be required to make payments on.
Fixed and adjustable mortgages are different in that you are not just paying interest for the first little while to be stuck with a very large unpaid balance by the end of the term (since the term is a much shorter period of time). Adjustable interest rates are adjustable in that they are constantly changing, and they don't even necessarily change with the housing market's interest rate, so the way the interest rate changes will be unpredictable. However, since you are paying principal along with interest, and the term of the loan is much longer, as long as you make all your payments in full, you will have the loan paid off by the end of its term.
Much like an adjustable interest rate, with a fixed interest rate, you are also paying off the principle along with the interest, so by the end of the term, you have the loan paid off as long as you make all the payments, but with a fixed interest rate, the interest rate is fixed, or in other words, stays the same during the entire course of the term. However, with a fixed and adjustable interest rate, you can refinance at any time.
