Thoughts on balloon loans

[Antuan La]

Local bank offers investment loans with 15% down instead of 20%. It is a balloon loan. What are your thoughts on these types of loans?

[Eric Veronica]

@Antuan La after having worked at a small local struggling bank during the crash years poisoned me on balloon loans. The biggest risk is that when the balloon comes due your bank will not renegotiate/extend term and you cannot find a bank to refinance the note. 

No one can predict where the economy will be in 5 or 7 or 10 years so no one can predict how aggressive or conservative banks will be when that note comes due. 

Personally I try to avoid balloons