11-17-2012 11:38 AM
I am considering the purchase of a co-op in DC. The building has an underlying mortgage which balloons in 2017.
All my research suggests that this is normal for co-ops since underlying mortgages are commercial loans, whose monthly payments are mostly interest and are refinanced perpetually rather than ever fully paid down.
Is that correct? Or, should I treat the 2017 balloon as a red flag and avoid this unit?
11-18-2012 06:26 AM
This is correct, underlying mortgages are often rolled over and refinanced when they balloon. I would however try to get more information about the rate on the current loan to see if the payments are likely to increase or decrease when it is refinanced to determine how this may impact on your fees going forward. 2017 is a few years away but will probably sneak up faster than we all realize.