I am not sure who my lender is so I thought I'd post here first. I have sent in a written request, as required to find out who my lender is, but I have not received that information yet.

I have fallen, now 6 months behind in my mortgage and requested a loan modification to put what I owe on the back end and for a reduction in my interest rate. They have offered me a trial program with the following terms. I have first listed what my current mortgage terms are.

I am 11 years into a 30 yr adjustable rate mortgage and my interest is 9.45%. My current payment is about $880. I've been in the home for 23 years. I did a $20K cash out in 2007 and my current principle is about $70K.

The trial payment terms are as follows:

New payment of $570, interest rate change to 4.375%, terms will change to a 40 year mortgage with a balloon payment at the end of about $25K.

Old Trial

Payment: $880 $570

Interest Rate: 8.75% 4.375%

Terms: 30 yr 40 yr

Balloon: $0 $25K end of term

Type Adj Rate Fixed

I have requested the amount of what my reinstatement would be but I haven't received it yet. It's between $6-7K including legal fees attached. What confuses me is several years ago, I was in a 5 year program where my interest rate was 4%. My payment then was about the same, $560. My homeowner's insurance has about doubled to about $1500 a year so I know that makes a difference, but I can't figure out how this trial payment is about the same payment as when I was in a temporary 4% loan, but it now calls for a 40 year term AND a balloon payment of $25K at the end of the note.

Can someone help me understand that? And I would love your thoughts!

The interest on the amount I am behind on payments, about $5K, is going to be capitalized. I am not good with finances so I don't really understand that. I'm wondering if I could find anyone to finance the amount to reinstate my loan $6-7K, would that be in my best interest. Would appreciate your thoughts and suggestions!