The old axiom was not to take on a balloon due under 7 years. The interest rates would drop or inflation would increase the price such that you could refi or sell. I personally prefer to negotiate in an out. A higher interest rate or some additional cash can allow an extention. You should have the resources to refi at that point. You could also use a graduated payment or interest rate to lower the payment at first and avoid the balloon.
I am fairly new to all of this, and this question probably seems pretty elementary, but I am attempting to buy a property and have offered the seller a note to carry for the down paying only interest then balloon at end. My question: What kind of refi techniques should I use to pay this balloon
Posted by John Behle on December 18, 1998 at 19:46:36:
There are many balloon payment alternatives discussed on the Cash Flow Forum on this site. You should build some of the clauses into the note and know the alternatives. Hit CASH FLOW on the left side of the screen.