Your Questions Answered
At Ashlar, I firmly b that an educated home buyer or seller is best equipped to make their own decisions. That’s why I take time out of my day each and every day to answer someone’s real estate question. And, when I think the answer can be useful to you as well, I share it here. So without further ado:
More than likely this is a forbearance as others have stated.
Forbearances are VERY variable so you need to be 100% sure of the terms. Primarily if you have to make up every payment delayed at the end of the forbearance period, or if they are moved to the end of the loan.
What you are talking about is not uncommon, where you have to pay off all the delayed months once the forbearance is ended.
Forbearances will also have a negative impact on your ability to get a loan or refinance in the near future, so my recommendation is to avoid it if at all possible!
There’s some other weird things that can happen during the course of a loan.
If you are late paying or do some other things like transfer title without paying off the mortgage, the lender can trigger the Acceleration clause which requires the loan to be paid in full nearly immediately. I don’t think that’s what you’re talking about here, though that could happen if you do not pay the catchup payment after the forbearance period ends.
A balloon payment is something a bit different and has to be put in place at the beginning of the loan.
It basically says example: “term of loan is 30 years, and we are calculating the payments for 30 years, but the balance is due in full at 5 (10,15) years”. This is more common on seller financing than traditional mortgages.
TL;DR: Best path is keep paying the mortgage, as house damage doesn’t remove your obligation to keep paying. Insurance will work to sort out the house, but you need to uphold your side of the obligation in the mean time. Alternatively consult a lawyer for options.