To get rid of those silly balloons with misspelled words, turn off “Show Predictions Inline”.
General -> Keyboards -> toggle off “Show Predictions Inline”. This setting is visible only if you have “Predictive Text” active (green). Both these settings should be “turned off” (greyed out).
The last step is to “Reset the Keyboard”: General -> Transfer or Reset iPhone -> Reset -> Reset Keyboard Dictionary -> ENTER PIN -> Reset Dictionary.
You will need to reset the keyboard periodically as Apple, for unknown reasons, maintains all keyboard errors. I believe that is why all these balloons pop-ups occur. It is probably an anomaly that Apple should correct.
I hope these steps help all the persons encountering this issue.