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Amortization: This is a loan repayment plan by which the loan is reduced via monthly payments of principal and interest.
Annual percentage rate (APR): The annual cost of credit over the life of a loan. This rate includes interest, service charges, points, loan fees, mortgage insurance, and other costs.
Loan in process account (LIP): Created by the lender, the total amount of the construction loan after closing (minus any deposits or prepayments made) is put into a loan in process account or LIP. During the construction process, the builder is then paid from this account according to a draw schedule determined by the lender.
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