Finance
What is a 'construction loan' in Illinois real estate development?
AA 30-year mortgage for renovating an existing home
BShort-term financing used to fund construction of new buildings, disbursed in draws as construction progresses and typically converted to a permanent mortgage upon completion✓ Correct
CA government-subsidized loan for affordable housing construction only
DA loan made by contractors to fund material purchases
Explanation
A construction loan is short-term (typically 12-18 months) financing for building new construction. Funds are disbursed in draws as construction reaches specified milestones (foundation, framing, etc.), verified by inspections. During construction, borrowers typically pay interest only on amounts drawn. Upon construction completion, the construction loan is either paid off or converted ('construction-to-perm') to a permanent mortgage.
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