3.5 - Liquid & Fixed Income Real Estate

Question 1

Monthly Mortgage Payment Calc

Answer 1

MP = MB * [i / (1 - ((1+i )^-n))

MB = Mortgage balance
i = monthly interest rate
n = # of months in loan term

Question 2

Monthly Mortgage Payment - Fin. Calculator

Answer 2

PV = Loan amount
FV = 0 (if fully amortized)
N = Total Loan periods
I/Y = interest rate
Solve for PMT

Question 3

Loan to Value

Answer 3

LTV = balance of loan / market value of property

*typ. should be 80% or less

Question 4

Interest Coverage Ratio

Answer 4

ICR = NOI / annual interest payment

*typ. required is 1.2 or greater

Question 5

Debt Service Coverage Ratio

Answer 5

DSCR = NOI / total loan payment

Question 6

Fixed Charges Ratio

Answer 6

FCR = NOI / all fixed payments

*includes first mortgage payment, lease payments, payments on other debt

Question 7

Conditional Prepayment Rate Benchmark (PSA)

Answer 7

*30 yr Mortgage

.2% per month, increasing by .2% each month till month 30 —> then remains constant at 6%