Understanding Changes to Your Mortgage Account

Consider your options when your mortgage balance comes due


What’s happening and why?


The type of home loan you have lets you make payments for a set amount of time or “term”. Typically, the full amount borrowed, as well as some fees, will not be completely paid off when the term ends. The term’s end is also called the loan’s “maturity date”.

When the term ends, the remaining balance will be due in one lump-sum payment, and the amount may be substantially more than you’ve been paying each month. This is sometimes called a “balloon” payment.

Also, if you had a loan modification and have only been paying principal and interest on part of your loan, the full balance on the other part of the loan may now become due. Here’s how:

  • As part of the modification, a $100,000 loan was split into two parts — a $70,000 portion and a $30,000 portion.
  • A fixed monthly principal and interest payment was only required on $70,000 of the balance, while principal and interest payments were deferred on the remaining $30,000.
  • Each fixed monthly payment made towards the $70,000 and any additional amounts you may elect to pay reduces its remaining balance until eventually the amount due is less than the monthly payment.
  • At that point, the final monthly payment, as well as the full repayment of the remaining $30,000, are due in a single, lump sum.

There also are other circumstances where a balloon payment may become due. Because each person’s situation is unique, please give us a call to discuss how your account is affected.

What you can do now

There are a number of things you can do well in advance of the maturity date, and because some options take longer than others, it’s a good idea to start the process now.  Also, we can’t accept partial payments after the account reaches term maturity — we’ll only be able to accept the full balance — so you’ll want to be ready ahead of time. To find out the exact maturity date of your mortgage — or if a loan modification will affect the maturity date — as well as the amount that will be due, please call us at the number below.



Frequently asked questions


Balloon loans

What is a balloon mortgage or a home mortgage balloon loan?

Your home loan was originated with a balloon feature. This means that you only make payments until your loan reaches its maturity date, which is typically well before the loan reaches a zero balance. When your loan reaches the balloon maturity date, you’ll be required to pay the remaining balance of your mortgage in a one-time, lump-sum payment, also known as a balloon payment.

How far in advance should I prepare for the end of my loan term?

You should start planning at least 2 years before the maturity date. Some of the options for paying off the balloon take longer than others to complete, and you’ll want to leave yourself enough time to get the paperwork done.

Can I get an extension on my current contract or maturity date?

No — extensions aren’t available at this time. However, if you’re experiencing a financial hardship, we may be able to help. For more information, call us at the number below.

What if I don’t have any equity in my home?

You may have options even if you have little or no equity in the home. To learn more, call a home loan specialist at the number below.

How are home loan payments calculated and why is one due?

There are different reasons you may have a lump-sum payment due:

  • If your loan was originally established with a balloon payment, your loan payments were not calculated to pay your account in full by the time your loan’s maturity date arrives.  These types of payments are known as “partially amortized payments.” When your loan reaches the final maturity date with partially amortized payments, you will not have paid off your entire outstanding principal balance due. That’s why a lump-sum balloon payment is due on or before the maturity date.
  • Some contracts calculate interest based on when the payment was received, and variations in when you made your payments may impact the amount that is due at the end.  Additionally, other balances such as taxes and insurance, may have been paid on your behalf and any of these amounts outstanding are also due when the full balance is due, the date your balance is due may be your maturity date or when you pay off your principal balance.
  • If your loan was modified, the modification may have deferred or set aside a portion of the balance to make your monthly payments affordable. The set aside amount is due when the full balance is due.

What if I can't make the scheduled balloon payment or refinance my outstanding balance?

You may have other options, but it’s important to reach out to us and discuss your situation as soon as possible so that you don’t default on your loan, which could negatively affect your credit rating or even put your home at risk.
 
Call us at the number below as soon as possible and let us help you understand your options.

Loan and payment options

How do I refinance my loan?

Refinancing your mortgage may be able to change your loan to meet your needs. Learn more about refinancing your mortgage.

How can I pay my loan balance in full now?

For a payoff quote on your mortgage loan, call us at the number below.

What are some options for paying off my loan?

You may apply to refinance a new first mortgage with Wells Fargo. Or give us a call at the number below to speak with a home loan specialist about your options.

Note:

  • Refinancing may not be right for your situation. Talk with a home loan specialist to learn more.
  • Different options may help you lower your interest rate, lower your monthly payment, or pay off your outstanding balance. If you extend your loan term, you may pay more interest over the life of your loan.
  • If you’re experiencing financial challenges, you may qualify for a modification with new terms and a possible interest rate reduction. Call us at the number below for more information or explore other payment assistance options.

Quick Help

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Disclosures

  • If you extend your loan term, you may pay more interest over the life of your loan.

    If you are a service member on active duty, an eligible spouse, partner, or dependent, or currently receiving SCRA benefits, please consult with your legal advisor prior to seeking a refinance of your existing mortgage loan. In some cases, a refinance may impact your eligibility for benefits under the Servicemembers Civil Relief Act or applicable state law.

    • Equal Housing Lender

  • Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.

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