Loan Mods with High Balloon Pmt at End of Term

[whatsinaname]

I see some people with approved loan mods have high balloon payments at the end of the mortgage term. How do you feel about that?

I mean to say, I doubt you can ever move house (sell) unless you can afford to pay off that balloon which means you are trapped.

[msndrstood]

Ours is $12,000 after 25 years, hopefully we will be able to make an extra payment a year and wipe it out before its due.

[shazloco]

We haven't signed anything yet, as we havent received the documents, but the terms offered on our 2nd loan which is actually much larger than our 1st is:
4% interest, 50year ARM and a 7 year balloon. We have no choice but to take it as we were told "take it or we foreclose". We are not happy about the balloon but we are at their mercy.

[litehouse01]

Shazloco............and thats a 2nd mortgage and they took the terms out that far to 50 yrs??????? WoW!!!!!!!!!!!

[sofla]

The big balloon payment at the end is the amount they had to "take out" of the loan in order for you to "afford" the payment. You dont get charged interest on that amount while you're paying but -- freddie/fannie especially -- do not "foregive" it -- it sort of makes business sense in that -- if they forgive the $$ and then we have a period of "inflation" -- housing prices rise etc., you turn around and sell for xx price -- they lost out on making the money and you (we) got the benefit.

I figure that if you wind up selling your home and the FMV does not cover the unamortized balance plus the balloon that you would wind up at that time requesting a short sale -- which would be approved through the then regular short sale channels.

just my thoughts - hope it helps.

[eawinter]

I am one with a huge balloon but I have no intention of selling/moving so for me it isn't a drawback. Plus, if it wasn't for my 2nd mortgage, I wouldn't be underwater so now I have to bust my butt to get that paid off.

And I agree with sofla that I had to have the balloon in order for Chase to make it affordable.

I figure you have to take the good with the bad at this point

[briknope]

On a lets say $12k balloon thats not bad at all! Over the course of a 30 year mortgage (for example) you will most probably refinance a few times and hopefully the home will actually go "up" in value and you just may be a square one before you know it. I would gladly take a balloon payment just for the sake of not moving and getting a foreclosure on my credit report. I'm underwater by over $80k now and I would take a balloon offer of 50k or more at this point.