5/30 loan with baloon payment due June1, 2009

[Cindyk]

Hi,
We currently have a Conforming 5/25 loan with Provident Funding at an interest rate of 4.625% The 5 year term is up this June, and we will have to pay the loan off or refinance.

To date, we have made all payments in full, on time, and have excellent credit. When we purchased the home in 2004, we made a down payment of $300,000 and our loan was for $150,000, so we have a large amount of equity.

I lost my job in March 2008. I was unemployed until mid-October 2008. Since then I have been working thru an agency in a temporary to permanent position, but as yet, have not been hired as a permanent employee. Because of this, we cannot refinance our loan, as my income would not be considered. My husband is retired and his income from SSI is
only $830 per month. We have very few debts beyond the normal living expenses.

We recently received some documents from Provident regarding the upcoming balloon payment, and the option of resetting our loan. We meet all the qualifications for the
reset as state by Provident funding. We would like to exercise this option, but the paperwork states that the new interest rate will "not be more than 5% above the our current rate".

What determines what that interest will be? Could we expect it to be much higher than the current rates for a re-finance. What if that rate, and the new monthly payment becomes more than we can afford? Can we then be considered as a hardship case, and get new loan terms under those circumstances?

If anyone has some advice, it would be most appreciated.

[Moe Bedard]

Hi Cindy,


Welcome to the forum and thank you for joining...............

These are the questions that you would need to ask Provident..........there should be a contact number on the documents that you received specifically for questions.

[balloonman]

your note should tell you how the reset interest rate will be calculated. What index and margin etc.

since it is conforming it should be close to the current 30 year fixed rate.