In the early 2000s, balloon mortgages became quite common, and now many people have realized that they may not be able to afford the final balloon payment as they thought prior to the recession. A balloon mortgage refers to a loan where lenders allow a borrower to only pay interest and a small portion of the loan through their monthly payments, and then to pay the remaining balance in one large final payment.
As can be imagined, with the economy changes that have occurred in the past decade, people that were excelling financially in the early 2000s, may not be doing as well in today’s financial climate and are facing a very scary payment.
If you still have time before the final payment due date, the best thing to do is work on raising your credit score and seeking refinancing options. However, if the date is nearby, then it may be beneficial to discuss modification options with your lender. Waiting until the payment is due and not paying the full amount will automatically mean that you have defaulted on the loan, avoiding this situation is the best plan.
There are ways to avoid defaulting on a balloon mortgage when the final payment is looming, but if it becomes unavoidable, the foreclosure defense attorneys at Graham Legal can help. You can feel confident meeting with us knowing that we have helped many families find a way out of foreclosure.