Explain Negative Amortization Loans with example?

Q: Explain the term Wraparound Loans?

A: Wraparound Loans:Wraparound Loans are also called as wrap. It is a type of mortgage loan.It allows a…

Q: Explain term Buydown Loans with examples?

A: Buy down loan is a loan in which a buyer will get the loan for reduced interest rate at least during…

Q: From the standpoint of a borrower, is long-term or short-term credit riskier? Explain

A: credit risk is define as the chances of a loss due to  borrower's failure to repay obligation in…

Q: Which of the following type of loan is best used for temporary shortfalls of income? a. Secured…

A: Loans can be short term loans or long term loans

Q: Explain Payment Caps and Negative Amortization?

A: Payment Caps: A payment cap is a customer protection that bounds the amount that your monthly…

Q: What contingencies are commonly found in permanent or take-out loan commitments? Why are they used?…

A: The contingencies found in permanent or take-out loan commitments and their use are as follows: A…

Q: Describe a short-term financing option and discuss the advantages and disadvantages.  Is there a…

A: Short term financing: Any loan that is obtained for a short period of time is Short Term financing.…

Q: What is a mini-perm or bullet loan? When and why is this type of loan used?

A: Answer: Project development may be characterized as the process of designing, planning,…

Q: What factors must be considered when deciding whether to refinance a loan after interest rates have…

A: Individuals always consider refinancing the loan when interest rate falls because they think they…

Q: Explain Negative Amortizing, Constant Payment Mortgage (CPM) Loans?

A: Negative amortizing: Negative amortization is a financial concept that refers to a rise in a…

Q: Why might a lender prefer a loan with a lower interest rate and a participation?

A: One meaning of loan participation is multiple lenders participating in lending to the same borrower.…

Q: Why would lenders, in general, tend to set loan maturities (not amortization, but when the loan…

A: Loan Maturity: The time period for which a loan is extended is known as the loan period.  The date…

Q: What is the indifference point under the net present value? When would there be a discount on a…

A: SOLUTION- NET PRESENT VALUE = PRESENT VALUE OF CASH INFLOW - PRESENT VALUE OF CASH OUTFLOW.

Q: How can we determine the borrowing rate of return?

A: The borrowing rate of return is the return that is charged on the borrowings made by the firms or…

Q: Explain mezzanine loan?

A: Mezzanine financing is a blend of both debt and equity financing. It is a way for firms to raise…

Q: What is a buydown loan? What parties are usually involved in this kind of loan?

A: INTRODUCTION There are various mortgage financing techniques which helps to reduce cost for the…

Q: Explain Collateralized mortgage obligations (CMOs)?

A: Collateralized mortgage obligation is referred to as complex debt security  that directs the…

Q: EXplain the loan structuring?

A: Loan restructuring is designing of loan according to the requirements of the borrower and also to…

Q: Does collateral reduces moral hazard by borrowers? Why?

A: Introduction: A collateral asset is an asset that a lender accepts as payment for a loan. Depending…

Q: Define Amortized loans

A: Loan is an amount borrowed by an individual from an individual, company, bank or any financial…

Q: What is a compensating balance? What effect does a compensatingbalance requirement have on the…

A:

Q: Describe the disadvantages of different methods of short-term debt financing.

A: Short term debt financing are also referred to as current liabilities.These are the financial…

Q: Explain ARM and Floating Rate Loans?

A: Adjustable-rate mortgage (ARM): It could be a kind of contract or mortgage where the coupon rate…

Q: What are spontaneous sources of short-term financing and unsecured sources of short-term loans

A: The source of funds which are having a zero cost is termed as a spontaneous source of funds. It is…

Q: What is the traditional cash equivalency approach used to determine how below-market-rate loans…

A: Introduction: The given question is related to the concept of real estate finance and investments.…

Q: Describe the concept of non interest bearing on loan.

A: A non-interest bearing loan is a debt for which there is no documented requirement for the borrower…

Q: What is the main purpose of loan loss provisioning? Explain the concepts of incurred loss model and…

A: The loan loss provision is the cash reserve created by the banks for the future credit risk. The…

Q: Which loan should Spike take and why?

A: Simple interest method is a method of computing interest on borrowed amount where interest is…

Q: A change in money demand or a shift in the money demand curve is caused by a change in * the…

A: the increase demand of money shift the demand curve up.

Q: Explain ARMs and Floating Rate Loans?

A: Loan is referred as the amount which is borrowed from the financial institutions or individual at…

Q: What is a loan amortization schedule, and what are some ways these schedules are used?

A: Loan is an agreement between lender and borrower where lender provide funds to borrower which repaid…

Q: sources of short-term financing and unsecured sources of short-term loans

A: Short-term financing is the credit or loan given to an enterprise for a period of less than one…

Q: How does a short term loan works?

A: Definition : A short term loan is a variety of loan that's obtained to support a short lived…

Q: Discuss some of the most elementary terms used in fixed interest rate loans?

A: A loan is referred as the borrowed amount which is procured by the borrower from various financial…

Q: Describe payday loans, tax-refund advances and structured-settlement advances—the  differences…

A: Payday loans are also sometimes known as cash advances. These are unsecured loans with maturity…

Q: Explain Partially Amortizing, Constant Payment Mortgage (CPM) Loans with example?

A: Amortization can be defined as paying back of the loan amount in installments according to the…