Final answer:
Permanent long-term mortgages are usually arranged before property construction is completed and have terms of 15 or 30 years. Banks consider these mortgages assets, and their present value can be estimated on the secondary loan market.
Step-by-step explanation:
Provisions for a permanent long-term mortgage that will be used to pay off the interim construction loan are usually made before the completion of the property construction. A typical mortgage term can be either 15 years or 30 years. When considering credit and mortgage loans, it is important to recognize that a mortgage represents a legal obligation to make payments to the bank over time, making it an asset for the lending institution.
The value of a mortgage loan being paid over 30 years can be measured by estimating how much another party in the market is willing to pay for it. This value assessment often takes place in the secondary loan market, where loans are bought and sold by financial institutions after being originated in the primary loan market. This process allows for interim construction loans to transition into permanent mortgages that homeowners will pay off over a set period.