First Property with small bank financing - 5 yr note 15 yr amort

[Trey Goodwin]

BP! 

Newbie needing advice on loan terms from a local bank. Is this a good loan and what questions should I be asking? Here are the details I have now: 

Purchase price $100,000

15% down $15,000

Improvements $15,000

20% down $3,000

Your total loan amount is to not exceed $97,000. This gets your ratios in line with our guidelines. For the 1st 12 months, you’ll pay interest only. This will allow time for the rehab to take place. 12 months may be too long, so we can look at 6 months. Then, once the improvements are 100% completed, and the interest only period is up, the loan will convert to P&I payments for a fixed 5 year period. Those payments will be based on a 15 yr amortization. What happens when the 5 years comes due? We’ll reprice it at that time to whatever the market rate is doing, and modify it for another 5 years, and so forth.