inspections are allowed and what is the cost?
loan lenders typically allow the
borrower to request one draw per month.
The administration Fee that was paid when the loan closed
covers the inspection costs.
The mortgage company
hires independent contractors, normally licensed appraisers, who perform the inspections
on the their behalf.
the Lender's Contingency Account?
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
the interest Reserve?
mortgage loan accrues 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 account.
The interest payments for the mortgage loan are debited from the
interest reserve line item. There
are generally enough funds in an Interest Reserve Account to cover
all of the mortgage 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.
deposits for kit and modular homes handled?
Construction Loan lenders will typically 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.
Get Started on Your Construction Loan Now... Click Here!
who visited this page, also found the following useful: