A great number of project owners/developers fund construction projects by obtaining construction loans. A construction mortgage loan (a.k.a. an interim loan) is a short-term loan used to build the improvements on the land. Often, once the improvements are complete, owners/developers utilize a prearranged, long-term permanent mortgage loan (a.k.a. final loan) to finance the entire project, which includes retiring the construction mortgage loan.
In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.