Property Valuation
A Massachusetts property's 'economic life' refers to:
AThe chronological age of the building
BThe period during which the building contributes positively to the value of the property✓ Correct
CThe period until the property's first major renovation
DThe length of the mortgage term
Explanation
Economic life is the period during which the improvements (buildings) contribute to the property's value. It ends when the cost to maintain the structure exceeds its contribution to value.
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Key Terms to Know
Depreciation
A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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