Why a 7 year loan?

[Kerry M.]

Hi - I have spoken to two bankers. The first is with a major bank who was talking about a 20 year mortgage. The second, a local smaller bank, without an application and over the phone, mentioned a 7 year 'abundance of caution' loan.

We paid cash (borrowed from ourselves.) The purchase price was very low for the area ($26K, normal would be 60-95's for half of this SFH in decent condition.) There is not a loan in place. The property is owned through an LLC.

We have turned it from a SFH back to to the duplex it used to be, and are adding two small apartments by subdividing and adding bath/kitchens. We are planning to get an appraisal soon after finishing the bathrooms and then asking him to estimate the value of the 4 units in its future finished state. One apartment is ready to rent and being advertised.

I'm O.K. with the 20 year loan, but the 7 year makes no sense to me. Is it something to consider? I am only familiar with loans on primary residence houses, not investments.

Thanks for your thoughts.