How do you make a balloon payment on a commercial loan?

[Matt Morand]

I have no real prior knowledge to commercial real estate financing, so I apologize if this is a newbie question, but through what methods is a balloon payment made on a commercial loan? If I buy a multifamily apartment building with 15 year balloon debt, am I expected to refinance to pay the loan? Sell the property? Get a new loan to pay off the old one?

[Curtis Bidwell]

@Matt Morand Your right on target!  Any of those are typical solutions.  I am currently doing a refi on a property I’ve had for 10 years.  My notes have been 5 year adjustable, 10 year balloon.  Chase commercial currently offered me 4.5% 5 year adjust, 10 year call, 30 year amortization. My total cost will be a mere $1500! ($1.75mm with cash out!).  

My local bank has as good or better interest and terms but my costs are considerably higher: almost $15k including .5% loan fee, $4k appraisal, title, filing, etc.  by adding back in the cost of capital (loan acquisition costs) this makes the most sense for me at this time.