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Cost Of Borrowing Money Is Called People can always find a use for money, so it costs to borrow money.. I = interest; P = amount borrowed (called "Principal"); r = interest rate; t = time. Like this:.

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finance home construction Loans typically last less than one year, and they are repaid with another "permanent" loan – you’ll get rid of the construction loan once construction is complete. Since construction loans have higher (often variable) rates than traditional home loans, you don’t want to keep the loan forever anyway.

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