"Find Out What a Loan Modification With Balloon Payment is All About"
by Walter Sigmore
Stop Trading Hours for Dollars

Most loan modification agreements, whether in 5 year or 40 year durations, contain a loan modification with balloon payment. The truth is, most agreements with drastically lower interest rates have balloon payments. The best interest rates tend to come with these higher payments at the end, but loan modification is not meant to be a permanent solution to financial hardship.

The concept of loan modification with balloon payment puts some homeowners off, but balloon payments are a completely normal part of modifications. It puts some off because they have the feeling that modification is a save-all, but really they are only meant to be a temporary source of help.

A balloon payment is when, near the end of the modification agreement terms, the payments suddenly rise to make up for the amount that was not paid. Some of these payments can make payments jump to be almost double that of that they were after modified. It is simply the lending company trying to catch up.

Some lenders do offer programs that do not include balloon payments at the end of the term, though they generally do not offer great interest rates. Any homeowner who is interested in the programs their lender offers can simply call their modifications or loss mitigation department to get the information. Asking about whether specific programs to have balloon payments is a good idea, as sometimes that is not mentioned at the start.

Modifications with a shorter term usually have higher balloon payments, and generally homeowners who are not sure when their financial hardship will end should opt for the longer term modifications to ensure they will be able to handle the sudden higher payments later on.

Anyone considering modification should be aware that it shouldn't be seen as a lender doing a favor, they are trying to get their money while you are trying to keep your home. If anything, this is shown in most lending companies' reluctance to accept modification applications -- 89 percent of homeowners who get modifications can't even make the first payment. So anyone trying to get modification should be sure that they can handle even a lower interest rate.

The long and the short of it is, a loan modification with balloon payment shouldn't be seen as a bad thing. And seeing a modification as an instant catch-all solution or favor is only going to be harmful in the long run. A modified mortgage should be taken even more seriously than one unmodified.

Contact the Author

Emplyed by HHFallon

Walter Sigmore
scholarships for mothers
Site: http://homeloanmodifications101.com

Is This Your Article? Do You Need To Edit or Remove It?

You may do either from within your account. Login here.

Once logged in, go to Edit, Articles on the menu. It will show you a list of your articles and give you the option of editing or removing them. 

If you want us to remove all your articles and your entire account for you, there is a $15 removal fee. Email service@pwgroup.com and tell us:

  • what you'd like to remove,
  • your name and email as it appears on the account
  • A link to at least one of your articles or your profile.
  • Include your Paypal email address and we will send you a Paypal invoice.

Find Out What a Loan Modification With Balloon Payment is All About

Related Articles