Northampton County District Attorney John Morganelli said he will seek the death penalty.
"It was a very difficult crime scene to see these individuals essentially slaughtered by this fellow using a knife," Morganelli said.
Confidantes of Merhi told the Associated Press that she and Ballard dated briefly about two years ago. Ballard told police he "murdered [his] girlfriend and her family and then the neighbor," according to court documents.
Ballard pleaded guilty to third-degree murder in 1992 and was sentenced to 10 to 20 years in prison, according to court records in Lehigh County. Ballard, then 18, was accused of stabbing Donald Richard in December 1991 in Richard's Allentown apartment, according to newspaper accounts from the time.
The motive for Saturday's attack remained unclear. Friends and relatives of Merhi said there was no indication that Ballard posed a threat to the family.
Police identified the other victims as Merhi's father, Dennis Marsh, 62; her grandfather, Alvin Marsh Jr.; and her neighbor, Steven Zernhelt, 53.
Merhi had two children, but neither was home at the time of the attack.
Ballard, who was injured in a car accident shortly after the rampage, was arraigned at his hospital bedside. It was not immediately clear if he had an attorney.
Merhi's close friend, Nicole Young, and her cousin, Desiray Dolly, told the AP on Sunday that Merhi and Ballard once dated, but that it wasn't serious and she broke it off.
Dolly said Ballard showed up at her 16th birthday party two years ago and behaved inappropriately around her friends.
"He just gave you that kind of feeling, that uneasy feeling," said Dolly, now 18. "He was offering us, 'If you ever need [alcohol], just let me know.' Constantly touching, putting hands on shoulders."
Ballard, however, did not bother Merhi after their relationship ended, according to Dolly and Young.
"I just don't get it," Dolly said. "He didn't give any kind of warning that I know of."
Merhi, who was divorced, recently celebrated her daughter's 10th birthday ("Happy bday babygirl," she wrote on her Facebook page), attended a Phillies game and a Sugarland concert, and spent a "hot as Hades" weekend at the Jersey Shore with her children.
The medical assistant was "bubbly, funny, cheery, high-spirited," said Young, 35. "She was always there when you needed someone to talk to."
Police were called to the brick twin house at 4:47 p.m. Saturday and found a gruesome crime scene, with blood puddled on the floor and splattered on the walls, according to Morganelli. Each victim had been stabbed multiple times.
Zernhelt, who lived in the adjoining twin, heard the commotion, ran over to help and was stabbed as he got through the front door, according to his brother.
"I'll say this about my brother: He died a hero to me because he was trying to go over there and do whatever he could to help. I love him, I always will," said David Zernhelt, 36, of Allentown.
Steven Zernhelt, who hailed from a family of 10 children, worked as a heating and air conditioning instructor. He and his wife had three grown children.
"Growing up, he always tried to resolve situations," his younger brother said. "He was the political family member of the brothers and sisters, who would always try to get everybody to get along with each other. So it wasn't surprising that he would try to help his neighbor like that."
After the attack, Ballard drove away in Merhi's Pontiac Grand Prix, and crashed it less than 10 minutes after police discovered the bodies. He had extensive leg injuries and was bleeding heavily. Medics who treated him at the scene spotted an empty knife sheath attached to his belt, according to a police affidavit.
An off-duty state police trooper who saw the accident asked Ballard what happened. Ballard replied, "It's obvious, I just killed everyone," the affidavit said.
Many of Merhi's family members learned of the rampage while attending a high school graduation party for Dolly at a local park. Merhi was supposed to be there, too, but she had suffered a bad sunburn at the beach and didn't feel well enough to go, Dolly said.
It was unclear Sunday whether Merhi knew of Ballard's past while they were dating.
"Michael Ballard, I hope you get what's coming to you," Young wrote on her Facebook page.
Ballard served about 18 years for the murder of Richard, 56, according to The Express-Times. He was released for a year in 2007 but was jailed again for a parole violation and then paroled on April 19, the newspaper reported.
On Saturday, Ballard was scheduled to return at 2 p.m. to a halfway house for state prison inmates where he had been living, the paper said, citing a Pennsylvania Department of Corrections spokeswoman.
But three hours later, he crashed a stolen car, officials said.