Financing Include a Loan Balloon? Be Prepared
I’ve been thinking a lot about balloons.
Not the pretty red ones that float into infinity if you let go of the string. I love those balloons!!
I’m talking about loans with a balloon payment.
I have some of those balloons, but I do not love them. I love them even less with the increase in interest rates. A lot, lot less.
Conventional loans for commercial real estate – owner-occupant or investment properties – are not fixed for 15 to 30 years like a residential loan. The term is negotiable, but the longest term we (Jim and I) have negotiated is a 10-year rate lock. In our situation, the most recent rate locks have been 5 to 7 years before the balloon payment looms.
