Learn more about Real Estate Finance here: https://youtube.com/playlist?list=PL66_dgoyyNLI7luPopaq89LZ8yNGLn3zI&si=2Ko7boJkIll1X1bv Learn real estate finance & investments: https://www.realestatefinanceacademy.com/ --- A Balloon Payment occurs when the payments on a loan are amortized over a longer period than the term of the loan. A loan may have a term of 3, 5, 7, or 10 years, while payments are amortized over 20 to 30 years. In this case, the final payment required to pay the loan off is called a "balloon payment" because it is higher than the previous payments. Amortization is the rate at which principal is paid down on a loan. A fully amortizing loan would have all of the principal paid down to the end at the last payment. But in the commercial world, lenders typically don't want to make 25 or 30 year loans. So quite often in commercial lending, we see loans that have partial amortization. Commercial lenders typically prefer to make 3, 5, 7, or 10 year loans. Not always, but often. However, if payments were amortized over, just say 10 years, then they would be astronomically high, and borrowers wouldn't be able to afford the payments and still have positive cashflow. So what's a very common is lenders will make a shorter term loan, but amortize the payments over say 25 or 30 years. The advantage of this is that it reduces the monthly burden and increases the cashflow for the borrower. So at the end of the loan term, the borrower ends up with what's called a balloon payment, and that balloon payment is just simply paying one last final payment that pays down the rest of the entire loan balance on the final payment. If you have questions, please share them in the comments below. We'll answer all questions -AND- your questions help us to build more helpful material! #TrevorCalton #investing #realestate #EvergreenLLC #realestateinvesting #commercialrealestate #finance #realestatefinance #realestateloan #loans #commercialloan #stepbystep #stepbysteptutorial #diagram #example #download #freedownload #howto CRE loan investing in real estate investment properties and commercial real estate commercial real estate lending commercial real estate loan SBA commercial real estate loan commercial real estate financing commercial property loan commercial building loan real estate lending best commercial real estate loans commercial property lending OTHER QUERIES: what is a balloon payment 2022 mortgage how balloon payment works for borrower explained what is a balloon payment how balloon payment works how balloon payment works for borrower balloon payment explained real estate investing real estate balloon payment balloon payment real estate real estate investing strategies investing in real estate real estate business investing how balloon payment works in real estate payment payment method business invest payment term