I don’t think this is the typical borrower profile now, but balloon loans are historically for people who have most of the cash needed for development (or who h

I don’t think this is the typical borrower profile now, but balloon loans are historically for people who have most of the cash needed for development (or who have all the cash needed and think that they can get a 10% return while their interest rate is 6% over the life of the loan.) In that case, since you already have most of the capital lying around, a balloon payment lets you use other cash but you’re not worried about a large payment. Seems like a lot of commercial real estate is structured as a balloon loan to people who may not be able to make the lump sum payment, which is probably where the underwriting failure lies. Refinancing is a tool a savvy borrower can use as rates go down, but it’s not a strict expectation that you do that if you get a balloon loan, even on short term loans.