Final answer:
A loan arranged by a builder that pays off a construction loan and provides financing for the purchaser is called a take-out loan.
Step-by-step explanation:
The loan arranged by the builder that pays off a construction loan and provides financing for the purchaser is called a take-out loan. This type of loan is commonly used in real estate construction projects.
A take-out loan allows the builder to repay the initial construction loan with the proceeds from the new loan. The new loan provides funding for the purchaser to buy the property once it is completed.
For example, if a builder has a construction loan to build a housing development, they can arrange a take-out loan with a bank or financial institution. Once the houses are completed, the take-out loan pays off the construction loan, and the builder can sell the houses to purchasers using the funds from the take-out loan.