Finance
A construction loan in real estate is typically:
AA long-term permanent loan with a 30-year term
BA short-term loan that finances the construction of a building, converted to permanent financing at completion✓ Correct
CFunded entirely by the FHA
DAvailable only for commercial projects
Explanation
A construction loan is a short-term loan that funds building construction. When construction is complete, it is typically converted to a permanent (takeout) mortgage.
Related Alabama Finance Questions
- Alabama's usury laws regulate:
- A VA loan guarantee benefit is available to:
- A loan-to-value ratio (LTV) of 80% on a $300,000 purchase means the loan amount is:
- A 'piggyback loan' (80-10-10 financing) is typically used to:
- A lender requires a home appraisal primarily to:
- The debt-to-income (DTI) ratio compares a borrower's monthly debt payments to their:
- A loan that requires only interest payments during the loan term with the principal due in full at the end is called a(n):
- A borrower has a gross monthly income of $5,000 and monthly debt payments of $1,800. What is their back-end debt-to-income ratio?
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →