my balloon payment is due and I can't get a loan I told my private mortgage holder she could have the house back and now she is taking me to court,why

I'm sorry to hear your situation.  You should consult an attorney with that contract in hand.  If you have been served with court papers (Complaint, etc.), you need to get to an attorney ASAP because if you don't file a response, you can get a Default, which will effectively prevent you from raising any defenses.  Now, why is she taking you to court rather than just agree to take the house back?  Well, we obviously can't get into her head, but in my experience it is because she also wants whatever money is potentially owed beyond the home value itself (or she just doesn't really want the house).  So, she'll seek a foreclosure of the property so that it gets sold by the Court to the highest bidder.  If it sells for less than what you owe, she'll be able (generally) to seek the balance from you in a deficiency action based on the judgment.  Depending on your situation, this can obviously turn into a very big deal with very big consequences.  Even if you ultimately decide not to defend yourself in the lawsuit, I would highly suggest having a consultation with an attorney, particularly one with experience in mortgage foreclosure defense (and defense when a private lender is involved).