A construction loan is a short-term real estate loan utilized to finance building costs. Funds are disbursed as needed or according to a prearranged plan, repaid upon project completion, often from a mortgage loan. These loans typically come with higher interest rates and origination fees.
Interim Financing, also known as bridge financing or a bridge loan, is a short-term loan arrangement, generally spanning less than three years, utilized when a borrower is unable or unwilling to secure long-term or permanent financing. It often serves to provide temporary funding while waiting for financial or market conditions to improve.
A piggyback loan is a financial arrangement involving two loans simultaneously to the same borrower, typically to eliminate private mortgage insurance (PMI) or to secure more favorable terms.
Presale refers to the sale of proposed properties, such as condominiums, before construction begins. It is a common practice used by developers to secure funds and gauge market interest in their projects.
Take-out loan or take-out financing is a permanent loan replacing short-term financing, especially for construction projects, where the conditions specified, such as unit sales or lease percentages, need to be met.
A takeout loan in real estate refers to a long-term mortgage loan made to refinance a short-term construction loan. In the securities industry, takeout refers to the withdrawal of cash from a brokerage account, usually after a sale and purchase have resulted in a net credit balance.
