What to do about balloon payment

[Anonymous]

I was told that a mortgage broker may be able to help me with a confusing mortgage situation.

Original purchase price $129000

Loan modification has a deferred principal balloon payment $30000 due in 2048

Current mortgage balance $82000

Current market value and my tax assessment range from $180000-$205000

I did a home modification three years ago and the terms included a balloon payment of $30000 due at the end. There was never a loan set up or anything to pay that balance. 

As I combine, on paper, my balance plus that $30000, I come to $112000 outstanding and my loan amount was $129000.

So I do have equity in this home as well as the increased market value but I have the balloon payment looming. 

Is it possible to take out a second mortgage for the balloon payment?

And if so would I be able to take out more than the $30000 to make home improvements?

I was looking into HELOCs but I think that this balloon payment would be considered a lien and I do not want them to demand full payment on that balloon amount or force a sale of my home.  I love my home but we need to remodel the bathroom because the tub has a crack that leaked water into the basement and the walls around it are crumbling, the exhaust fan is broken.   I got the tub sealed and that has stopped the leak.

Is it hard to qualify for a home improvement loan?

My current credit picture is

FICO 8 and mortgage scores

EQ 666/609

TU 665/591

EX 656/555

Annual income $41000

Mortgage payment $852

New car payment $435 (not reporting yet)

1 paid charge off $412 not updated on credit report but have a letter from bank that it is paid

1 paid collection of $67 1 year old

Still paying closed Discover card $850/1950 always on time since payment plan 

1 Capital One Visa 17 years old, paid on time 87% of the time.  Had 120 day late 5 months ago but has been on time since and brought the balance down to under 50%

1 Capital One MC 2 years old and paid on time 100%

2 student loans no lates, accounts in good standing

1 personal loan of $856 in good standing 100% paid on time, 3 years old

DTI under 25% but new auto loan and new Amex BCE not yet reporting, with auto payment DTI will be more like 31%

Applying alone

I have had my home since 2011 and have paid on time religiously the past 2 years. 

I have been with employer for 17 years. 

[sccredit]

Why not just refinance the mortgage into a new 15 year note. Rates are insane right now

[Anonymous]

Can you elaborate for me please?  

If I refinance my current mortgage ($82000, 4.5%, $852/month), wouldn't I then need to pay the $30000 balance off?

If I do refinance, can I do that to include the balloon payment? 

---

@sccredit wrote:

Why not just refinance the mortgage into a new 15 year note. Rates are insane right now

---

[CreditInspired]

First, I'll elaborate on the refinance. Yes, the total amount refinanced will be $82K + $30K ($112K)

Second, because of your lates, charge offs, new car loan, and low mortgage scores, especially in this economic climate, I think it would be difficult to qualify for a decent interest rate. 

Others will be along to provide more guidance.

[Anonymous]

Perfect, that is exactly the kind of info I needed and it's all stuff I can work on. 

I don't need to get a HELOC immediately.  I don't need to refinance immediately.  The balloon payment is not due for 28 years. 😁 But I needed to know if I can refinance to include that balloon payment.    

And knowing that I have something to work towards as my accounts age motivates me.  

The charge off was $412 and it is paid.  The collection was only $67 and it's been paid for a year.  

So those are handled. 

The lates are certainly going to hurt for awhile.  I tried to GW with Cap One but they said no and that's okay.  Maybe after they see another few months of on time payments I can try again.  

---

@CreditInspired wrote:

First, I'll elaborate on the refinance. Yes, the total amount refinanced will be $82K + $30K ($112K)

Second, because of your lates, charge offs, new car loan, and low mortgage scores, especially in this economic climate, I think it would be difficult to qualify for a decent interest rate. 

Others will be along to provide more guidance.

---