Mortgage terms are pretty confusing in general, the term “balloon rider” is no exception. So, what is a balloon rider on a mortgage? Is it a good thing or a bad thing? Do you have one on your mortgage? There are many people with mortgages who have balloon riders and are not even aware of the fact. However, finding out whether or not you have one is as simple as checking the paperwork you signed when you first bought your house. If you see that you have one, you need to know what it is.
What Is a Balloon Rider On a Mortgage?
The duration for most mortgages is somewhere between 15 and 30 years. In spite of having good intentions, many people are not able to totally pay off their principal amount within this length of time. Things happen and the loan may get dragged out for several years or more. If your mortgage comes with a balloon rider, you should see a date marked somewhere beside the balloon rider notation. On this date, your lender will request that you pay in one lump sum the entire balance left on your mortgage, assuming any balance is left. As stated above, you ideally won’t have a balance remaining, so the presence of the rider might be irrelevant. If you do have a balance left, you’re going to have to figure out how to take care of it. If you’re still unclear on exactly what a balloon rider is, Fannie Mae — a reputable company offering mortgages — has some very useful documentation you can download regarding balloon riders.
What To Do If You Still Owe Money
like most people, you probably don’t have a lot of money sitting around to cover whatever is left on the balance of your mortgage — assuming the amount is up into the thousands. This can certainly be cause for alarm because obviously you don’t want to lose your house. But fortunately, you do have a few options if you can’t quite come up with the money you need. The most obvious option is to attempt to sell your home, which you should be able to do if you owe well below what your home is worth. If you don’t want to sell your home, you can try to keep it and check on refinancing your mortgage through the mortgage company you’re currently using. If you’ve been diligent in the past about making your payments on time, they should be willing to work with you on this.
Advice to New Homeowners
In the beginning, after you’ve gone through the process of trying to figure out how to get preapproved for a home loan. don’t just mindlessly sign all the paperwork you are given once the loan is approved without really noticing what you are signing. If you have a balloon rider on your mortgage, you need to know it. This isn’t something you want taking you by surprise later on when you’re not prepared for it and don’t have the money to deal with it. As you sign each piece of paperwork, look it over carefully to see exactly what you’re signing. Ask questions if need be. Buying a house is a major thing and could very well end up being the most expensive purchase you ever make in your life. It is not something to take lightly, and for that reason you need to know all the details.