Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

Question: 1 / 415

When construction is complete, and the appraiser verifies that plans and specifications have been met, the loan is then replaced by a permanent amortizing loan, often called a:

A) graduated construction loan

B) bridge loan

C) take-out loan

Once the construction is finalized and the appraiser confirms that all plans and specifications have been adhered to, the loan transitions into what is commonly referred to as a take-out loan. This type of loan serves as a long-term, permanent financing option that replaces the initial construction loan.

The primary purpose of a take-out loan is to convert the short-term financing used for the construction into a more stable and manageable long-term loan, typically with amortization features. This process allows borrowers to pay off the interim financing, enabling them to settle into a loan with a structured repayment schedule, often resulting in lower monthly payments compared to the original construction financing terms.

This type of financing is crucial for ensuring that the borrower has a solid financial foundation to manage their mortgage going forward, offering predictability and stability after the construction phase has been completed.

Get further explanation with Examzify DeepDiveBeta

D) blanket loan

Next Question

Report this question

Download Loan Officer Practice Exam PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy