Mortgage Loan Underwriting Assumptions
Mortgage Loan Underwriting Assumptions:Property Purchase Price: $1,500,000Appraised Market Value: $1,800,000Property Net Income Estimate: $120,000 per yearLoan – to – Value Ratio: 80% (max)Interest Rate: 6.0%, no points – or – 5.0% with 5 points Amortization Period: 20 yearsLoan Term: 5 yearsRequired Debt Coverage Ratio: 1.35 (minimum)Borrower’s Additional Closing Costs: $50,000CALCULATE THE FOLLOWING:1. Loan amount available to the borrower based only on the LTV ratio2. Maximum loan amount with the required 1.35x debt coverage ratio – based on the two interest rate options3. Monthly Debt Service and Annualized Debt Service for each rate option4. Mortgage Constants – Rm5. Balloon Balance due at maturity for each interest rate option6. Dollar amount of Points paid at closing7. Lender’s Effective Yield to maturity for each option8. Effective Borrowing Cost (EBC) for each option9. How would you decide which interest rate option to choose?
