Finance
A commercial real estate loan in Nebraska typically has a shorter amortization period than residential loans because:
ACommercial properties depreciate faster under IRS rules
BCommercial lenders require more frequent refinancing to reassess the loan's collateral and creditworthiness✓ Correct
CCommercial mortgage rates are federally regulated to be shorter
DCommercial tenants always prefer short-term leases
Explanation
Commercial loans often have 5–10 year terms with balloon payments (though amortized over 20–30 years). This allows lenders to reassess the loan's risk periodically given the dynamic nature of commercial real estate markets.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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