Unit 23 Flashcards
A construction loan often has an adjustable interest rate. What serves as the index?
The prime rate
The term of the construction loan is typically approximately
1 year.
A Certificate of Occupancy
certifies that a home complies with building and safety codes.
During construction, the borrower generally makes
interest-only payments on the loan.
How does an appraiser determine the value of a home that has not yet been constructed?
The appraiser will use the builder’s plans and specs.
How are construction loans typically dispersed?
Draws when major milestones are completed
Which type of new construction provides the buyer with the most control over design?
Custom
A construction loan is dispersed to
the builder
The settlement deadline in the New Construction Real Estate Purchase Contract is generally listed as
a number of days after the buyer has received notice of substantial completion.
The home warranty offered for new construction will often cover
two years.
Which loan type requires two closings?
Construction-only loan
For a homeowner to be protected against mechanic’s liens, the homeowner must occupy the residence within
180 days of completion of construction.
The New Construction Real Estate Purchase Contract outlines how many phases in the construction process?
3
Construction loan interest rates are typically
higher than a traditional mortgage.
Home warranties offered by a builder on new construction
generally cover more than homeowner’s insurance.
