(2) Fill in the second sheet (titled underwriting). Where it says Income Test, compute the biggest mortgage payment Ann can make given her NOI in 2015 computed above.

Recall from slides 12: NOIPMT 1.20 , which implies the maximum PMT=NOI1.20 .

(2.a) What is the biggest mortgage payment the bank will allow Ann to make given her expected NOI in 2015?

Using the maximum payment, compute the maximum loan Ann can get. Recall for an IO loan: PMT=interest rateLoan Balance The interest rate is given in the spreadsheet. Use the PMT computed in (2.a)

(2.b) What is the maximum loan amount corresponding to a DSCR of 1.2?

(2.c) What is the biggest loan Ann can get assuming 90% maximum LTV?

(2.d) Assume for the rest of the question that Ann will Borrow the maximum available loan amount. What is the loan that Ann borrows to buy the property?

(2.e) What will Anns annual debt service payment be?

Inputs
Annual Interest Rate	5.75%	IO loan, 5-year balloon	Income Test
Minimum DSCR	1.20		Maximum Annual Mortgage Payment	$
Maximum LTV	90%		Maximum Loan Amount	$
Cash Available to Close	$1,500,000.00
Asking Price / Value	$11,822,261.54		Collateral Test
NOI 2015	$768,447.00		Maximum Loan Amount LTV Test	$
			Both tests
			Maximum Loan Amount	$
			Debt Service Payment	$
			Loan Ann Borrows
			Loan amount to buy the property
			Debt Service Payment	$