Advice choosing commercial property refi loan
Hi all
Im in the process of refinancing a commercial loan for a rental property.
There are 2 competing lenders, 1 is offering 4.25%, 5/5 30 year amortization.
The second lender is offering several different types, the comparable ones of which are 5/5/5/5/5/5 ARM at 4.125%, 30 yr amort, and also a 7/7 balloon at 4.5%. Prepayment penalty would be reset after every adjustment period.
As a person with good financials and income, and the thought of selling the property in lets say 5-10 years, does any jump out as the better option? Is the 5/5 one better because at year 10 i'll be able to sell or refi without a prepayment penalty? The 5/5/5/5/5/5 sounds so tempting because of the rate but essentially i'm locked in for 30 years and have a prepayment penalty no matter what if i refi or sell later on right? The flipside is the rate difference, which is not that different of a monthly payment.
I guess its unclear to me whether its better to choose the option WITH a balloon or without in my scenario. Essentially, comparing loan A (5/5) vs loan B (5/5/5/5/5/5), at the end of 10 years, I can refinance loan A with a similar market rate that loan B would get readjusted to, but with loan A I also have the flexibility to say I want to pay it all back, sell it, etc.
Thx