How Do Commercial Loans Work?

[Nancy Tran]

Hi,

I am attempting to secure financing for a five-plex via a commercial loan. This is my first real estate property, but it's older and the loan amount is small (less than $200k), so the banks and credit unions I shopped around at are asking for higher interest rates. Here are the best options I've been given:

25% down:

5/30 - 6.63%

7/25 - 6.97%

10/10 - 6.92%

15/15 - 7.05%

10/30 – 7.11%

35% down:

5/25 - 5.5%

Am I understanding correctly that at the end of the first number, a balloon payment is potentially due? How do people navigate this? Is it very likely I'll just be able to refinance at the end of this period? From a leverage standpoint, it would appear the best thing to do is the 25% down, 10/30, but I just worry about the potential balloon payment after 10 years if I am unable to refinance.

I can afford the 45% down, but would love to be able to use that capital toward another purchase.

Thank you for all responses in advance,

Bruce