3 or 5 years Loan?

[Michael Chong]

Hello guys,

I am researching on loans and super confused on whether to go with a 3 year fixed or 5 year fixed loan? on a 10 unit multi family

Loan Amount: $1,000,000

Pricing: 6.75% for first 5 years, thereafter, floating at 1 yr. T-Bill+3.25%

Loan Fees: TBD

Terms: Monthly payment of principal and interest based on amortization of the loan amount over a period of 30 years with balloon payment on the maturity date.

Maturyity Date: Ten (10) Years.

Is this not an ARM? It is 6.75% fix 3 years with prepay penalty 3-2-1, or 6.75% fix 5 years with prepay penalty 5-4-3-2-1.

what does the penalty mean? or the 1 yr. T-Bill+3.25%?

Pros and cons of these 2 loans?

Thank you!