Great video! So far, I am halfway through it and still got the other half to go. I've been taking notes. Question - for commercial properties what is the reason behind balloon payments, if ostensibly 30 year mortgages are given when balloon payments are expected after 10 years?
The lender probably prefers a 10-year term because the lender doesn't have confidence that the value of the real estate as collateral will hold up over a longer period. Loans on commercial property are rarely made for more than a 10 to 15 year term. However the loan may have its monthly payment set at a level that would amortize it over a longer period, such as 20 or even 30 years, in order to keep the monthly debt service down to a more moderate level that the borrower can afford to pay. The obvious result is that a balloon payment will be due when the loan matures after, say, 10 years.
ME1 is the first mortgagee or first lender. ME2 is the 2nd mortgagee or lender. (ME is an abbreviation for mortgagee - that is, a party that makes a loan and takes a mortgage.)
Great Professor, well-explained property concepts.
ProfDale is my hero!
Great video! So far, I am halfway through it and still got the other half to go. I've been taking notes. Question - for commercial properties what is the reason behind balloon payments, if ostensibly 30 year mortgages are given when balloon payments are expected after 10 years?
The lender probably prefers a 10-year term because the lender doesn't have confidence that the value of the real estate as collateral will hold up over a longer period. Loans on commercial property are rarely made for more than a 10 to 15 year term. However the loan may have its monthly payment set at a level that would amortize it over a longer period, such as 20 or even 30 years, in order to keep the monthly debt service down to a more moderate level that the borrower can afford to pay. The obvious result is that a balloon payment will be due when the loan matures after, say, 10 years.
Who are emmy 1 from emmy 2 ?
ME1 is the first mortgagee or first lender. ME2 is the 2nd mortgagee or lender. (ME is an abbreviation for mortgagee - that is, a party that makes a loan and takes a mortgage.)