A short term interim loan for financing the cost of construction. The lender advances funds to the builder at periodic intervals as the work progresses.
|Fair Market Value|
The price at which property is transferred between a willing buyer and a willing seller, each of whom has a reasonable knowledge of all pertinent facts and neither being under any compulsion to buy or sell.
An index is a widely used published interest rate that lenders use to set the interest rate on loans. 10-year U.S. Treasury securities are often used for 30-year fixed-rate loans. ARM loans are commonly based upon the, one-, three-, and five-year U.S. Treasury security yields; the monthly average interest rate on loans closed by savings and loan institutions; or the monthly average costs-of-funds incurred by savings and loans. Lenders adjust the interest rate up or down on an adjustable rate mortgage by measuring the difference between a current index rate to the ARM interest rate, and adding a margin.
A mortgage made subsequent to another and subordinate to the first one.