ou have located a warehouse property to purchase at a price of $320,000. You plan to make a 20% downpayment of $64,000. Interest rates are rising quickly, but you’ve managed to secure a fixed-rate commercial mortgage at 4.5%. Commercial mortgages are typically much shorter than consumer mortgages like home loans, so the lender has offered you a 10-year term. Sometimes commercial lenders will amortize a loan for 10 years, but require the borrower to pay off the loan in a shorter period of time by paying off the rest of the loan in one final payment, known as a "balloon" payment. How much would you have to pay for that balloon payment (the ending balance) if your loan was still amortized for 10 years but you had to pay it off in 5 years?
You have located a warehouse property to purchase at a price of $320,000. You plan to make a 20% downpayment of $64,000. Interest rates are rising quickly, but you’ve managed to secure a fixed-rate commercial mortgage at 4.5%. Commercial mortgages are typically much shorter than consumer mortgages like home loans, so the lender has offered you a 10-year term.
Sometimes commercial lenders will amortize a loan for 10 years, but require the borrower to pay off the loan in a shorter period of time by paying off the rest of the loan in one final payment, known as a "balloon" payment. How much would you have to pay for that balloon payment (the ending balance) if your loan was still amortized for 10 years but you had to pay it off in 5 years?
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