Finance
A construction loan differs from a standard mortgage because:
AConstruction loans have lower interest rates than standard mortgages
BFunds are disbursed in stages as construction progresses, and the loan converts to a permanent mortgage upon completion✓ Correct
CConstruction loans are only available to licensed contractors
DConstruction loans require a 50% down payment
Explanation
A construction loan provides short-term financing during construction, with funds disbursed in 'draws' as construction milestones are completed. When construction is complete, the loan typically converts to (or is refinanced as) a permanent mortgage. This eliminates the need for two separate loan closings.
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