Finance
What is a 'construction loan' in Delaware real estate?
AA long-term mortgage obtained after construction is complete
BA short-term loan used to finance the construction of a building, typically disbursed in draws as construction progresses, then converted to or replaced by a permanent mortgage upon completion✓ Correct
CA loan specifically for buying properties that need renovation
DA government-backed loan for constructing affordable housing in Delaware
Explanation
A construction loan is a short-term (typically 12–18 months) loan disbursed in stages (draws) as construction milestones are reached. Interest is typically paid only on drawn funds during construction. Upon completion, the construction loan is either converted to a permanent mortgage (construction-to-permanent) or paid off by a new permanent loan.
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