When an Arizona commercial balloon payment is due

A commercial mortgage often uses a 25- or 30-year amortization and a shorter term, commonly five, seven, or ten years. Each monthly payment includes principal, but not enough to finish the balance. At maturity the unpaid principal is due in one sum. That sum is the balloon. An interest-only loan balloons for the entire original principal, because no principal was paid along the way. Neither structure is a sign that the loan was written badly. It is how the documents were built. The glossary on this site defines the word. This note is what to do when the date is close and the property is in Arizona.

Three different requests get mixed together. Paying the balloon off with cash is a payoff. Replacing the note with a new loan of about the same size is a refinance. Asking the new loan to be larger than the payoff, so cash comes out, is a cash-out. Those are Arizona refinance and Arizona cash-out. They are not the same application. A maturity that sits inside the national 2026 schedule is the loan maturities note.

What we will arrange, and what we will not

If the property is investor-owned and income-producing, or it is commercial property the business occupies, we can take the balloon date, the payoff quote, and the rent roll to lenders who make new loans. The new lender decides proceeds, recourse, and term. We do not promise the new loan will cover the balloon. If it falls short, the owner brings the difference, sells, or talks to the existing lender. That last conversation is not ours. Capital Market Funds does not negotiate defaults, forbearance, or modifications of a note it does not hold.

If the loan is already past due, or a trustee's sale has been noticed, stop using this page as a plan. Talk to an Arizona real estate attorney about the notice and the deadline. We are not that attorney, and arranging new debt is not a defense to a sale. We also will not tell you to skip a payment.

Refinancing before the balloon can still cost money. Yield maintenance, defeasance, or a step-down prepayment is owed under the old note even when the business reason is 'the balloon is coming.' Estimate it with figures from the note, using the prepayment estimator. The estimator is not the payoff letter. The amortization calculator shows a balloon from numbers you type, including an interest-only case. It does not know your loan number.

A short list before the date

Get the payoff quote from the servicer, not from memory. Read whether the quote includes prepayment, default interest, or reserves. Match the maturity date on the note to the date the servicer is using. Pull a current rent roll and a trailing twelve months. If you want cash out above the payoff, say so, because that is a different proceeds test than 'cover the balloon.' If you only need to retire the balance, say that too.

Permanent debt is the usual takeout when the building is leased. Bridge is the conversation when it is not. Those pages are Arizona permanent loans and Arizona bridge. Craig Hoebing works from Scottsdale, license CMB-1047342, NMLS 1445066. A form on the refinance page is a request to talk. It does not postpone a maturity.