How to structure monthly payments before a balloon payment

[Aidan Birmingham]

I am closing a seller financing deal but am confused with how monthly payments are split up between principal and interest. How do I determine how much principal is owed at the 10 year mark for the balloon payment? I have looked at amortization tables but the payments seem to be almost 75% interest in the first 10 years. Is there a good way to structure the agreement?

The terms are below:

Sale Price: $230,000

- Down Payment: $5,000

- Loan Amount: $225,000

- Interest Rate: 3.75%

- Loan Term: 40 years (480 months)

- Interest-only for the first 1.5 years

-Year 10 ballon payment due: X (Refi Loan with bank)

[Henry Clark]

Simple math.  You are using a 40 year term. Thus very little principal is paid off.

Your amort table is showing you the correct balance.  

You can do two things to pay more principal.  Shorten your term rate.  Since you are paying less in monthly payments.  You should be cash flowing more.   You can choose to either pay more each month or save the money and pay down more principal at the balloon date.