How to Reset Balloon Mortgages
A balloon mortgage has a payment amortized over 30 years, but requires the full amount due in five or seven years from the loan date. To avoid having to come up with a large sum of money to pay off your balloon mortgage, you can exercise the option to reset it. This will reset your balloon mortgage to the current market rate to extend the time frame for full repayment.
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Instructions
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1
Occupy the home. To reset a balloon mortgage, one requirement is that you live in the home that carries the mortgage.
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2
Clear all liens against the property. The home must not have any other liens than the balloon mortgage that you wish to reset. Check with the county courthouse at least 90 days before the loan maturity date to make sure no one has placed a lien on your home without your knowledge.
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Pay your mortgage on time for at least one year. You must make all payments on time for the year prior to the maturity date of the mortgage.
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Keep your credit in good standing. Make all payments on time for every loan and credit card you have. Negative credit reporting may affect your chances of getting your balloon mortgage reset.
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Apply for the reset. Contact the lender that carries the note on the balloon mortgage at least 60 days prior to the maturity date. The mortgage company will require you to qualify for a reset of the mortgage.
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