Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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Prepare for the Certified Apartment Portfolio Supervisor (CAPS) Exam with a focused quiz based on Module 2. Enhance your learning with multiple choice questions designed to reinforce your understanding of the CAPS material and boost your confidence for the test.

Practice this question and more.

Which term refers to a short-term loan arrangement for property development?

Fixed-rate mortgage
Construction loan
Balloon mortgage
Equity loan

The correct answer is: Construction loan

The term that refers to a short-term loan arrangement specifically for property development is a construction loan. This type of financing is designed to cover the costs associated with building or renovating a property. Borrowers typically use construction loans to pay for materials, labor, and other expenses incurred during the construction process. Construction loans are usually structured as short-term loans, which means they are intended to last only for the duration of the construction project. After the project is completed, the borrower may need to secure a new mortgage to pay off the construction loan, transitioning into a long-term financing arrangement. In contrast, fixed-rate mortgages are long-term loans with a fixed interest rate, balloon mortgages have a short-term structure but require a large payment at the end, and equity loans involve borrowing against the equity in an existing property rather than funding new construction.