Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n)
a. either financing or investing activities.
b. operating activities.
c. investing activities.
d. financing activities.
The Correct Answer for the given question is option d. financing activities.
Cash receipts received from the issuance of a mortgage notes payable would be classified as a financing activities because it records the transactions which deals with amount raised through issue of any instruments. The cash received is used to finance the purchase of the property. The mortgage note is a loan that is secured by the property, and the cash received from the sale of the note is used to fund the purchase of the property.
Answer Explanation for Question: Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n)
A mortgage payable is a property owner’s obligation to repay a loan which is secured by property. Mortgages are classified as long-term obligations from the borrower’s standpoint. Any portion of the debt due within 12 months is classified as short-term.
The total amount due is the principal remaining on the loan.The underwriting process is required for both you and the home you want to buy when you apply for a mortgage.
The prospective lender will examine whether you have good credit, and whether the home you want to buy has enough value to secure the loan in case you default.
A mortgage note is a legal document that pledges your property as security for a loan. The note spells out the amount of money you’ve borrowed, the interest rate and when the loan must be repaid. Mortgage lenders require borrowers to sign two mortgage notes: a promissory note and a deed of trust.
When you take out a mortgage loan, you’ll sign two documents: a promissory note and a deed of trust. The promissory note is your personal promise to repay the loan. It lists the amount you’ve borrowed, the interest rate and when the loan must be repaid.
The deed of trust names the lender as trustee of your property and gives the lender the legal right to foreclose on your home if you default on your loan payments.