You are considering giving a loan to a prospective commercial property investor. Youare concerned about their ability to earn sufficient income on the property relative totheir annual mortgage payments. Which should you look at?Debt coverage ratioLoan to value ratioEquity to debt ratioThe sale price of the property in foreclosureThe PITI divided by the debt service

Debt service coverage ratio is the ratio that tells the available cash with the firm to repay its…

Answered: You are considering giving a loan to a…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter13: Investing In Mutual Funds, Etfs, And Real Estate

Section: Chapter Questions

Problem 10FPE

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Similar questions

Property investment constitutes a large and long-term commitment to an individual. Describe the outcome of taking a property loan during fluctuating interest rates?
Given the role of the loan originator in the securitization process of a mortgage loan described in the text,do you think the loan originator will be worried aboutthe ability of a household to meet its monthly mortgagepayments?
While appraising a property assigned as a collateral, Fima estimates the cash flows that are expected to be received (i) every year from the property and (ii) when the property is eventually sold (or salvaged) in the future. She then discounts such using a relevant rate to get the present value. Fima uses which collateral valuation approach? a. Historical Value Approach b. Cost Approach c. Market Approach d. Income Approach
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.
What is the current debt coverage ratio of the property? (Hint based on the first year's information).
a buyer purchased a home using a va loan. an appraiser was assigned to estimate the value of the property for the lender. the appraised value was less than the contract price. if the buyer really wants the property which of the following choices is the buyers best option do nothing because the seller must sell the property at the appraised value Hire an appraiser and see if a second appraisal yields a higher appraised value seek an fha lender who will automatically make up the difference between the contract price and the appraised value make up the difference between the contract price and appraised value in cash
If you were applying for a home mortgage loan today, would a lender viewyour debt-to-assets ratio favorably? Why or why not?
Give typing answer with explanation and conclusion Commercial real estate question: What are the main points to look for in the term sheet? a) Loan amount and maximum LTV b) Interest rate, loan term and prepayment penalty c) Borrower’s experience qualification requirements d) a and b e) All of the above
What is the first step in calculating the lender's effective yield and calculating the borrower's effective cost of funds for loans? 1. Calculate the periodic loan payment based on the appraisal value. 2. Calculate the periodic loan payment based on the tax assessor's value. 3. Calculate the periodic payment based on the contract loan amount, nominal interest rate, and full amortization period. 4. All of the above.
Briefly describe the process that led from a homeowner purchasinga home to an investor purchasing a collateralized debt obligation.
What is a nonrecourse loan? Will a nonrecourse loan given by the seller of real estate to the buyer increase the amount the buyer has at risk? Explain.
Which of the following must be known to compute the interest rate incurred from financing an asset purchased with an annuity? Group of answer choices fair value of the asset and timing of the annuity payments fair value of the asset purchased, number and dollar amount of the annuity payments present value of the annuity, dollar amount and number of the annuity payments future value of the annuity and number of the annuity payments

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