Finance
Iowa's Construction to Permanent loan is a financing product that:
AOnly finances commercial construction
BCombines construction financing and permanent mortgage into a single loan that converts after construction is complete✓ Correct
CRequires two separate closings and two sets of loan fees
DIs administered by the Iowa Finance Authority exclusively
Explanation
A Construction-to-Permanent (CTP) loan provides funds during the construction phase and automatically converts to a permanent mortgage upon completion of construction. This eliminates the need for a separate construction loan and reduces closing costs compared to two-loan approaches.
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Key Terms to Know
Closing Costs
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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