Definition: Indicates the requested Loan Term (in years). The period of time over which the loan is repaid (e.g. a loan with a 10-year term and a 25-year amortization will have a balloon payment at the end of 10 years).
After working in both commercial real estate lending and investing for the past ten years, I can say two things with absolute certainty concerning commercial real estate loans: 1) Lenders re-trade Borrowers far more often than they should on the loan terms they put out on their initial term sheet 2) there’s almost nothing that angers a Borrower more than being re-traded (or worse having their loan denied) because an underwriting item wasn’t taken into consideration on the front end. Any experienced commercial real estate investor has probably had this happen to them at least once, if not multiple times. It can end up costing the Borrower a lot of wasted time, money, and energy, and can make the entire industry look shady*; while working in commercial lending, I personally spent half of my initial conversations with Borrowers trying to convince them that I was actually working in their best interest. It was extremely exhausting and I’m calling the industry out on it–it’s high time we clean this process up.
