Five year balloon loan

3 Replies

I am working on a (2) single family home purchase. I am using a commercial lender. I started with requesting a 30 year fixed, but I am actually leaning toward a 5 year balloon at 4.5%, 25% down, amortized over 25 years. I've never used a balloon loan, it makes me nervous. What should I be looking for? What concerns should I have? What's the best practice for using this kind of lending? Any help that can be provided would be much appreciated!

@Nathan Cornett I may can provide some insight as I have 20+ commercial loans with 8 different banks. They all have balloons and I had similar concerns about them. 

A conventional loan with a low fixed rate is more attractive but there are flexibility upsides to commercial lending that are great too. Here is a thread that may be helpful: A Case for Portfolio Lending

My experience has been that they are very helpful if you'd like to grow quickly. Hope this helps.