A 180/360 loan is classified as which type of mortgage?

A 180/360 loan is classified as a balloon mortgage because it has a short amortization period relative to the long term of the loan. Specifically, it indicates that the borrower makes monthly payments based on a 30-year amortization schedule for the first 180 months (or 15 years). However, after this period, the entire remaining principal balance becomes due in a lump sum payment. This structure allows for lower initial monthly payments compared to a fully amortized mortgage, but it requires the borrower to be prepared for the balloon payment at the end of the term, making it crucial to have a clear repayment or refinancing strategy in place.

This classification is distinct from adjustable-rate or pay-option mortgages, which involve different structures concerning the interest rate and payment calculations. A hybrid mortgage typically refers to loans that have both fixed and adjustable features, which does not apply in this case.