A borrower's construction loan has a 12-month term, but construction is only 60% complete when the loan matures due to weather delays and permit issues. The borrower has been making interest-only payments on time. What typically happens next?
Correct Answer
C) The lender may offer a loan extension with additional fees and updated terms
Construction loan maturity with incomplete projects typically requires negotiation of a loan extension. Lenders may offer extensions but usually impose additional fees, updated interest rates, and revised terms to compensate for the extended risk period and administrative costs.
Why This Is the Correct Answer
Construction loan maturity with incomplete projects typically requires negotiation of a loan extension. Lenders may offer extensions but usually impose additional fees, updated interest rates, and revised terms to compensate for the extended risk period and administrative costs.
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