Finance
What is a 'construction loan' in Oregon real estate and how does it differ from a permanent mortgage?
AA construction loan finances land acquisition only; permanent mortgages finance the building
BA construction loan is a short-term loan disbursed in draws as construction progresses; a permanent mortgage is long-term financing upon completion✓ Correct
CBoth are identical products offered by different lenders
DA construction loan is government-backed; a permanent mortgage is conventional
Explanation
A construction loan is a short-term, higher-interest loan that finances the building phase. Funds are disbursed in draws at construction milestones (foundation, framing, etc.). Upon completion, the borrower converts to or obtains a permanent mortgage (or uses a 'construction-to-permanent' loan that converts automatically). Oregon builders frequently use this two-phase financing structure.
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