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Updated almost 11 years ago on . Most recent reply

Alpha Diawara's profile image
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Alpha Diawara
  • Investor
  • from Glenolden, Pennsylvania
  • Member since Jul 12, 2014
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Alpha Diawara's profile image
Alpha Diawara's profile image
Alpha Diawara
  • Investor
  • from Glenolden, Pennsylvania
  • Member since Jul 12, 2014
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Alpha Diawara
  • Investor
  • Glenolden, PA
7
Votes |
76
Posts
Multi-Family and Apartment Investing

Balloon Payment

Alpha Diawara
  • Investor
  • Glenolden, PA
Posted

Can anyone explains to me please how the balloon payment works

Thank you

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Nik S.'s profile image
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Nik S.
  • from Ohio
  • Member since May 24, 2014
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Nik S.'s profile image
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Nik S.
  • from Ohio
  • Member since May 24, 2014
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Nik S.
  • Ohio
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Nik S.
  • Ohio
Replied

@Alpha Diawara 

Ok, my latest commercial loan:

20 years amortization 

7 Year Fixed Interest Rate w/ it ballooning at year 7.

MEANING, my total amount financed is divided amongst a 20 year repayment plan @ a certain % of fixed interest. At the end of my term (year 7), I have to either make a BALLOON payment (pay the balance of the loan off completely), OR Refinance the loan and restructure the deal with current interests rate OR simply sell the property before the 7 years and avoid making the payoff amount and/or refinancing. 

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