construction loan

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Construction loan

A short-term loan to finance building costs.

Construction Loan

A short-term loan used to finance the building of some real estate project. The builders take out a construction loan in order to begin the project while they obtain long-term funding. Because there is no guarantee that the builders will be able to obtain long-term funding and a construction loan is not intended to fund an entire project, construction loans are fairly risky, and, as a result, have high interest rates.

construction loan

A short-term mortgage taken to finance the construction of a real estate project before permanent long-term financing is obtained. Because of its relatively high return, some real estate investment trusts specialize in this type of loan. Construction loans are often more risky than long-term mortgages.

construction loan

A loan originated for the purposes of providing payment for construction work or subdivision development.See also building loan agreement.
References in periodicals archive ?
overdue development and construction loans nationwide are up 40% this quarter, an increase of $2.
Taaffe was a Vice President and Construction Loan Group Manager with the Bank of Los Altos where she tripled both the bank's construction portfolio and total construction loans outstanding over a four-year period.
The recently formalized unit is responsible for servicing construction loans for third party clients, such as agencies and investment banks, and will service any construction loans in securitizations where KBREC is named servicer.
Major lenders will compete for construction loans for these projects, but until recently these same lenders have not been willing to provide permanent financing, which traditionally was provided by Fannie Mae and Freddie Mac.
The program was created because builders had difficulty obtaining home construction loans during the fluctuating financial climate of the early 1990s.
The group is responsible for servicing Wachovia's construction equity projects and will handle credit-based issues for securitized construction loans.
Permanent financing: A mortgage Loan, usually covering development costs, interim Loans, construction Loans, financing expenses, marketing, administrative, legal, and other costs.
The scheme to defraud involved two construction loans from First Service to Penacook Realty Trust to develop a condominium project in Concord, New Hampshire known as the Oak Bridge Condominiums.
The Bank's southwest Florida residential construction loans are located primarily in the Cape Coral area of Lee County.
Fremont has focused instead on providing higher yielding bridge and construction loans, more complex deals that oftentimes carry a higher risk profile, but also allow the firm to separate itself from the pack and close loans where others can't using its creativity and extensive real estate know how.
May 19 /PRNewswire/ -- California builders took out $854 million in construction loans in April, up 8.
Companies that have been servicing construction loans for at least five years and have demonstrated expertise in managing a diverse portfolio of construction loans are viewed favorably,' said Carlson.

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