An Acquisition, Development, and Construction (ADC) Loan is a short-term loan used to finance the acquisition of land, development of infrastructure, and construction of buildings.
A bridge loan is a short-term financing solution used to bridge the gap between the termination of one loan and the commencement of another loan. Typically employed in real estate, bridge loans allow borrowers to meet liquidity requirements while awaiting long-term financing.
A construction loan is a short-term loan used to finance the building of a home or other real estate project. It covers costs such as the purchase of land, materials, and labor until the project is completed.
A development loan is a type of commercial loan designed to finance the construction or renovation of buildings primarily for commercial use. It is sometimes interchangeably referred to as a construction loan.
End Loan, often referred to as a Permanent Mortgage, is a financing process that replaces a construction loan or interim loan when a property is completed. This loan facilitates long-term financing once the project transitions from the construction phase.
A Loan Commitment is an agreement by a lender to provide a borrower with a specified amount of funding under specific terms at a future date. This commitment often includes a locked-in interest rate, providing certainty to the borrower.
A permanent mortgage is a long-term financing option, typically over 10 years, used to finance the purchase or sustainment of a real estate property. It becomes fully amortized over time and is often used in conjunction with construction loans.
A piggyback loan combines a construction loan with a permanent loan commitment or refers to a mortgage held by more than one lender, often used to avoid private mortgage insurance.
A presale involves selling properties that are yet to be constructed, such as condominiums. It allows developers to secure financing and gauge market demand before actual construction begins.
A Standby Fee is a sum required by a lender to provide a Standby Commitment. The fee is forfeited if the loan is not closed within a specified time.
Takeout financing refers to the commitment to provide permanent financing following the construction of a planned project. It typically requires specific conditions to be met, such as achieving a certain percentage of unit sales or leases. Most construction lenders mandate takeout financing to ensure the construction loan is 'taken out' by a permanent loan post-construction.
