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Loans for Development


Which of the following types of loans is repaid as part of the selling price when a developer uses the loan proceeds to buy land, which is then subdivided and resold?
A. bridge loan
B. conventional mortgage
C. blanket loan
D. reverse mortgage




Answer is C. blanket loan.
A. is used to buy property and quickly start construction before approval of a long-term loan, in B. a fixed or variable interest rate is applied to borrowed money over a fixed period until the amortized payments are repaid, D. is not a development loan: a 62 year or older borrower is able to release equity in a principal residence with no payments required.
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