Balloon Mortgage Questions

[Jason Green]

I am trying to purchase a rental property that is in foreclosure. It is a 1br/1ba condo fully renovated. Bank has dropped the price from 97k to 55k. I am offering 50k cash. My question is this. My banker says a regular mortgage is a waste of time and money for such a cheap property. He suggested a balloon loan. The terms he suggested are 5 years at 6% 300/mo payment with a balloon payment of $46,000 after 5 years. I dont know anything about balloon but why not do it longer than 5 years. Any advantage or disadvantage? Thanks.

[Account Closed]

Small loans can be very difficult to obtain from conventional sources. I'm confused though do you have all cash or are you looking at 100% financing? Do you have an exit strategy? The terms seem reasonable enough, but you need to have a plan because 5 years can go by quickly.