Form 3260 at a glance
What it is: Balloon Note (Fixed Rate): the Multistate Balloon Fixed Rate Note-Single Family-Fannie Mae Uniform Instrument, Form 3260.
Who signs: If more than one person signs this Note, each person is fully and personally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed.
A filled-in Form 3260 example: a borrower signs a balloon note
How to fill out Form 3260, box by box
City and State
Enter the City and the State.
Property Address
Enter the Property Address.
Borrower's Promise to Pay
Under Borrower's Promise to Pay, enter the Principal, the amount of the loan that you have received, and who Lender is. You will make all payments under this Note in the form of cash, check or money order.
Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the Note Holder.
Interest
Under Interest, enter the yearly rate. Interest will be charged on unpaid principal until the full amount of Principal has been paid.
The interest rate required by Section 2 is the rate you will pay both before and after any default described in Section 6(B) of this Note.
Payments
Under Payments, enter the day of each month and the date of the month beginning on which you will make your monthly payments. You will make these payments every month until you have paid all of the principal and interest and any other charges described under Payments that you may owe under this Note. If, on the Maturity Date you enter, you still owe amounts under this Note, you will pay those amounts in full on that date.
Enter the place where you will make your monthly payments, or a different place if required by the Note Holder.
Under Amount of Monthly Payments, enter the amount of your monthly payment in U.S. $.
Late Charges for Overdue Payments
Under Late Charges for Overdue Payments, enter the number of calendar days and the %. If the Note Holder has not received the full amount of any monthly payment by the end of that number of calendar days after the date it is due, you will pay a late charge to the Note Holder, in the amount of that % of your overdue payment of principal and interest.
You will pay this late charge promptly but only once on each late payment.
If you do not pay the full amount of each monthly payment on the date it is due, you will be in default.
If you are in default, the Note Holder may send you a written notice telling you that if you do not pay the overdue amount by a certain date, the Note Holder may require you to pay immediately the full amount of Principal which has not been paid and all the interest that you owe on that amount. That date must be at least 30 days after the date on which the notice is mailed to you or delivered by other means.
The signatures
Sign on the line marked Borrower under Witness the Hand(s) and Seal(s) of the Undersigned. Sign Original Only.
More rules for Form 3260
This loan is payable in full at maturity. You must repay the entire principal balance of the loan and unpaid interest then due. Lender is under no obligation to refinance the loan at that time. If you refinance this loan at maturity, you may have to pay some or all of the closing costs normally associated with a new loan even if you obtain refinancing from the same lender.
You have the right to make payments of Principal at any time before they are due. A payment of Principal only is known as a Prepayment. When you make a Prepayment, you will tell the Note Holder in writing that you are doing so. You may not designate a payment as a Prepayment if you have not made all the monthly payments due under this Note.
You may make a full Prepayment or partial Prepayments without paying any Prepayment charge. If you make a partial Prepayment, there will be no changes in the due date or in the amount of your monthly payment unless the Note Holder agrees in writing to those changes.
Sources
[1] Form 3260 1/01, Multistate Balloon Fixed Rate Note, Fannie Mae (the Official source link on this page).