Finance
Construction-to-permanent loans in Nebraska allow a builder/buyer to:
AAvoid paying any interest during construction
BFinance construction with one loan that automatically converts to a permanent mortgage at completion✓ Correct
CPurchase the lot and begin building without any down payment
DBuild without permits and convert to a permanent loan after inspections
Explanation
A construction-to-permanent loan covers the construction phase and then converts (with one closing) to a standard long-term mortgage once the home is completed and a certificate of occupancy is issued.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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