Cite two types of costs necessary for a real estate development. How does a construction loan differ from a permanent loan?

Two types of costs necessary for a real estate development is hard costs and soft costs.

Answer: Hard costs and Soft costs

Explanation:

For real estate development there are two types of costs - hard costs and soft costs. Hard costs is the expenses incurred directly for physical construction of the building. Soft costs is for the indirect expenses for the construction of the building.

Permanent loans have fixed rate of interests. Construction loan has got fluctuating rate of interests till the time of construction. When the prime rate changes the interest fluctuates which is termed as float.