question about balloon payment - Posted by JB-TX

import · June 12, 2001, 10:45am

Posted by Lazaro on June 12, 2001 at 11:16:22:

In 5-10 years you would have the loan paid off. You would do that by a refi. Hope that helps.
Cordially,
Lazaro

import · June 12, 2001, 10:45am

Posted by JB-TX on June 12, 2001 at 10:45:08:

I saw in a couple of replies to people’s questions that one should ask the owner to finance and have a balloon payment in 5-10 years. What is the point of that? Is it to buy more time to obtain conventional financing? Thanks

import · June 12, 2001, 11:46am

Re: question about balloon payment - Posted by Stacy (AZ)

Posted by Stacy (AZ) on June 12, 2001 at 11:46:51:

As Lazaro said, it gives you time to pay-down principal and probably receive the benefit of appreciation, so it’s easier to get refied (or sell) in the future.

Also, offering a balloon should be done only if the seller needs an extra incentive to accept seller financing. The best bet is to get 20 or 30 year amortization on seller carry-backs, at a good interest rate (or zero), without a balloon. Then there’s no pressure to refi or sell until you’re good and ready.

Stacy