(Question) Difference between term length and amortization duration?
I will list some information I'm reading about commercial loans on a website, as I want to purchase a multifamily property in a year or so. I'm sure the numbers will be different by then, but I want to understand floating rate and about the amortization. 

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I get confused over amortization as it is, I've tried watching videos on it and from my understanding it is the difference of how much of the monthly payment is going to interest and the principal of the loan.

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Term: 10 Years Fixed

Fixed rate 4.12% - 5.62%

Floating rate 3.13% - 5.25%

85% - Owner-Occupied / 75% - Investment

Max amortization: 30 Years 

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So the max amortization, does that mean I could have a 30 year out loan? I feel like its wrong simply because I read that most lenders will not go over 20 years for a commercial investment. 

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I understand the fixed rate (I think), does this mean for the first 10 years on a loan that can be up to 30 years will be from 4.12%-5.62%, after 10 years would it just be the floating rate until then? Isn't that subject to change from the federal reserve as well? 

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Either way, thanks for reading this dumb mess
[{"id": "h0h8vwg", "text": "Loans are often amortized over a longer period of time than the term because it makes repayment manageable. Build out an amortization table in excel and play with the amortization length. This will give you the best idea of how the payments change. You will pay more interest and less principal at first at some point that will flip until year 30. You will notice that the loan won't be paid off completely at the end of the term. Depending on the terms of the notes you may have a balloon payment, be required to refinance, or switch to a floating rate.\n\nIn your case it would seem that you will be paying a fixed rate for 10 yrs that will convert to a floating rate. Basically this is the banks way of mitigating their exposure and rate risk. If rates pop up, they will capture this upside and they know they won't make below the 3.13%. However, read the agreement. Hopefully you can refinance into a fixed (possibly lower) rate at year ten.", "replies": [{"id": "h0hrr78", "text": "What do you mean by a loan being amortized?", "replies": [{"id": "h0hvngu", "text": "You'll save time and potential confusion by googling the definition.\n\nYou should also research how to build an amortization table in excel or this site is pretty basic but produces a decent example: https://apps.wheda.com/calculators/loanamortization/\n\nThe amortization period is the length of time, over which, if you made ever single payment as scheduled, you would pay off the loan. The term is the length of time you have to actually pay it off or the terms of the note change. So a loan with a 40.year amortization and a ten year term will have lower monthly payments than a loan with a 30.year amortization and a ten year term.", "replies": [], "depth": 3}, {"id": "h0i2bbh", "text": "I'll just give you kind of a long story short explanation about commercial loans.  Mine have always amortized over 20 years, and typically the rate is fixed for the first five or seven years.  After that, the rate will float.\n\nA lot of times, when the fixed term of the loan is done, you'll sell the property, refinance it to get some of your equity back, etc.  It would be unusual in a commercial property to hold on to the same loan all the way to the end of the term.  Almost certainly, somewhere along the way it would make a lot of sense to replace the initial loan.\n\nThe info you posted there appears to give you a range based on if you wanted a fully fixed rate during the initial 10  years, or a lower rate if you're willing to accept a floating rate for the initial 10 years.  I personally prefer a fixed rate for as long as they will give it to me. But other people have different priorities. Some people want interest only loans for example so that they have more monthly cash flow. This all gets kind of complicated as to which loan type would be best for you, but I think you understand the basic premise.\n\nIf you have any follow-up questions, ask away and I'll do my best to clarify!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "h0hxxpy", "text": "*Amortization* is the schedule over which the loan is being paid down. A 30-year amortization means that the loan would be fully paid off after 360 monthly payments (30 years). \n\nOn non-investment loans, like your personal residence or your car loan, the amortization period is also the term. That is, you can just keep paying the loan all the way down.\n\nFor investment loans, often the term is shorter than the amortization. That means that the entire loan is due at the end of the term. If you have a 10-year term with a 25-year amortization, then your payments are set as if you\u2019re paying it off over 25 years, but after 10 years there will be a *balloon payment* due for the remainder of the loan. As scary as that sounds, it just means that you will have to refinance at that time. 95% of the time the current bank will just extend the loan for another term as long as you\u2019ve been paying and aren\u2019t difficult to work with. But the interest rate environment in 10 years could be massively different than it is today, so there is a risk that your loan terms would change a lot when that balloon payment becomes due.", "replies": [], "depth": 1}, {"id": "h0tykdf", "text": "A fully amortized rate is a rate where after the amortization period, the loan balance will be paid off in full if all payments were made as scheduled. \n\nOn a 10 year fixed with 25 yr amortization, you will make 10 years worth of payments based on the calculation of paying off the loan in 25 years. When the 10 years is up, the loan with \"adjust\" depending on rates at that time...or you will be required to payoff the note with a ballon payment (the remaining balance between 25 years of payments and 10 years of payments) or refinance the remaining balance into a new loan with a similar structure. MOST commercial loans are structured this way.", "replies": [], "depth": 1}]