Finance
What is a 'construction-to-permanent' loan in Hawaii and how does it simplify building?
AA. A loan for purchasing property adjacent to construction sites in Hawaii
BB. A single loan that funds construction (with draws) and automatically converts to a permanent mortgage upon project completion, avoiding the need for two separate closings✓ Correct
CC. A government program for converting old buildings to new construction in Hawaii
DD. A type of construction loan that permanently remains interest-only in Hawaii
Explanation
A construction-to-permanent (C2P) loan funds construction through disbursements (draws) and automatically converts to a standard mortgage upon project completion and a certificate of occupancy. This simplifies the process by requiring only one closing (vs. separate construction and permanent loan closings), reducing closing costs and avoiding qualification for two separate loans. Very popular in Hawaii for custom home building.
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