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How long
will it take for the borrower to receive the funds after the Draw
Request has been made?
Deposits and
soft cost expensed can be funded within 48 hours of receiving a paid
receipt or invoice. For
hard cost expenses, the disbursement will be released after we have
received an inspection report performed by our local inspector and
update from the title company indicating the title to the property
is free and clear of any liens.
We will review the inspection and title report and disburse
the request up to the project completion percentage.
This process takes an average of 7 business days.
How many
inspections are allowed and what is the cost?
We allow the
borrower to request one draw per month.
The administration Fee that was paid when the loan closed
covers the inspection costs.
Who does
the inspections?
A third
party, contracted on our behalf, performs the inspections.
What is
the Lender's Contingency Account?
A
Contingency Account is money set aside for unforeseen circumstances
or cost overruns that may occur during the construction or
improvement of a home. Disbursement of these funds is on an "as needed"
basis and will generally be in proportion to the completion of the
home. Of course, as
with other costs, a Draw Request is required for disbursement of
these funds. In addition, evidence of the overrun will also be
required in the form of receipts, paid invoices or cancelled checks.
Once construction is complete, any money remaining in the
Contingency Account can be disbursed to the borrower upon his or her
request.
What is
the interest Reserve?
The borrower
will accrue interest as funds are disbursed on the loan and it will
require a monthly payment to satisfy this accrual.
Because the borrower may be currently paying a mortgage, some
loans are set up with an interest, reserve.
The interest payments for the loan are debited from the
interest reserve line item. There
are generally enough funds in an Interest Reserve Account to cover
all of the Interest payments that may be due during the construction
term. If there is no
money left in the Interest Reserve Account the borrower will need to
make the interest payments. Interest
payments are due on the 1st of the month.
If the interest payment is not received by the 15th of the
month, a late charge will be assessed.
Additionally, disbursements will cease until interest
payments are current.
How are
deposits for kit and modular home handled?
We can
disburse 75% of the funds allocated for the kit or modular home as a
deposit. The remaining
25% of the funds designated for this kit or modular package are
disbursed when the materials have been delivered to the site
("dropped") and verified by an inspection.
If there are multiple drops required for the delivery of the
materials, we will only pay for the materials delivered to the site.
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