Portfolio Lender Terms: Did I Do Well?

[Brad Gibson]

I'm in the process of purchasing a duplex for "buy and hold" purposes that will cash flow from the start in one of my local markets.  I'd like to know if what I'm doing with a local bank to finance the purchase is about par for the course with a portfolio lender.

The bank has offered a rent of WSJ Prime +1% that is re-adjusted every six months. 20% down with a 5 year balloon on a 20 year amortization schedule.  No points and no fees.  Do I need to be wary on this deal? 

The reason I ask is because after I ran out of conventional loans, I've gone with commercial lenders like Finance of America Commercial or RCN Capital.  Their terms are different: 30 year amortization.  20% down.  Interest rates in the high 5's or low 6's  fixed for 30 years.  They all offered the opportunity to buy down the interest rates.  There are some points required to the lender as well as fees to the broker who connected me to the lender.

The fact that the portfolio loan is a 5 year balloon and the floating interest rate are a bit of a concern, but I guess I could always refinance into a fixed rate product later.

Thanks in advance for weighing in.