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Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
- What are some of the major differences between loans for residential and commercial real estate?
- What types of risk does the LENDER face in making commercial real estate loans? What potential benefits does the lender receive?
- What types of risk does the BORROWER (or OWNER) face when taking a commercial real estate loan? What is the potential benefit?
- What is meant by positive financial leverage? What about negative financial leverage?
- What drives the spread between 10-year commercial mortgage rates and the 10-year Treasury yield seen in Exhibit 16-2?
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- Which of the following is the principal risk faced by a home equity lender? a. Interest rates in the economy may fall b.Home prices in the area may decline c.Interest rates in the economy may rise d.Home prices in the area may riseWhich of the two main participants involved in real estate finance are seeking to maximize risk adjusted return on surplus income for themselves or others, along with low risk and high return projects? borrowers mortgagers lenders (mortgagers Please do fast ASAP fast8. How do rising interest rates affect the size of real estate loans that lenders will advance?Again, be specific.
- What is the break-even mortgage interest rate (BEIR) in the context of financial leverage? Would you ever expect an investor to pay a break-even interest rate when financing a property? Why or why not?Why might a wraparound lender provide a wraparound loan at a lower rate than a new first mortgage?Explain why the return associated with an investment includes both the income paid by the issuer and the change in value associated with the investment. Suppose interest rates on residential mortgages of equal risk were 8 percent in California and 10 percent in New York. a.Could this differential persist? What forces might tend to equalize rates? b.Would differentials in borrowing costs for businesses of equal risk located in California and New York be more or less likely to exist than differentials in residential mortgage rates? Would differentials in the cost of money for California and New York firms be more likely to exist if the firms being compared were very large or very small? c. What are the implications of the trend for financial institutions to become large mega banking organizations and to engage in nationwide branching? Which fluctuate more, short-term or long-term interest rates? Why? Suppose a new process was developed that could be used to make oil out of seawater. The…
- What is the advantage of a variable-interest loan? Protects the borrower from rising interest rates Borrower can capitalize on a reference rate decrease Makes it easier for the borrower to plan for future payments Reduces the total interest payments Which of the following tools is used to analyze the industry attractiveness in the credit application process? PESTEL analysis Management analysis Ratios analysis SWOT analysisWhich of these is NOT likely to lead to more expensive mortgages? O Higher origination loan to value ratios Uncertainty in the ability of banks to access properties through repossession More variable rate mortgages than fixed Longer mortgage duration (or "mortgage term")Why might the cost of a mortgage loan be greater than the cost of using unsecured corporate debt to finance corporate real estate?
- You will discuss credit from the lenders point of view. What factors do lenders consider when making new real estate loans? When banks make loans they are taking a risk based on several factors including creditworthiness. You will discuss how banks determine the creditworthiness of borrowers. Topic: Creditworthiness Respond to the following questions: . How does the bank determine if a borrower is credit worthy? . Does this analysis guarantee that the borrower will be able to pay off the loan as agreed? • What happens if their credit scores are below 500? What alternatives would someone with no credit history have? .Which of the following is a feature of a home equity loan? Group of answer choices a. The interest rate on a home equity loan is higher than that on other loans. b. The interest paid on a home equity loan is usually tax deductible. c. A home equity loan is generally the first mortgage loan. d. A home equity loan is a single-payment loan. e. A home equity loan is an unsecured loan.How might a sudden decrease in people's expectations of future real estate prices affect interest rates? O A. Interest rates would increase because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase. B. Interest rates would increase because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. OC. Interest rates would decrease because real estate would have a relatively higher rate of return compared to bonds, which would cause the demand for bonds to decrease. O D. Interest rates would decrease because real estate would have a relatively lower rate of return compared to bonds, which would cause the demand for bonds to increase.