Forbearance and Balloon Payments: What You Need to Know
The Challenge of Balloon Payments
Forbearance offered temporary relief during financial hardship by pausing mortgage payments, but those missed payments still need to be repaid. Many homeowners now face balloon payments—a lump sum of all deferred payments due at once—creating financial strain for those still recovering.
Why Balloon Payments Are Difficult
- Large Lump Sum: Deferred payments from a year or more can result in a hefty bill.
- Cash Flow Strain: Even stable incomes may struggle to absorb such a large payment.
- Risk of Default: An unmanageable payment can lead to foreclosure.
Options to Manage Balloon Payments
- Negotiate with Your Lender: Spread payments out by adding them to monthly bills.
- Request a Loan Modification: Adjust loan terms to make repayment more manageable.
- Refinance: Incorporate the deferred amount into a new loan with better terms.
- Seek Financial Assistance: Explore programs like the Homeowner Assistance Fund (HAF).
- Consult a Housing Counselor: HUD-approved counselors can guide you through available options.
Take Action Today
If you’re facing a balloon payment, don’t wait. Reach out to your lender, explore assistance programs, and seek professional guidance to protect your home and financial future.
Closing Note
Foreclosure may feel like the end, but it’s often the start of a new chapter. With the right support, you can take the first step toward a fresh start—contact us now!