For example, the asking price is $100,000, estimated repairs $50,000. The lender verifies that the future value (with repairs) will carry $150,000. The loan is written at $150,000.
The buyer buys the property and closes. The $50,000 in repairs is held by the title company and released to the general contractor (draws) based upon completion and appraiser's inspection that work was satisfactory.
A construction to permanent loan is different. The home is to be built in the future it does not exist at closing. The FHA 203K loan the home exists and it will be re habbed.
Brock Realty Inc.
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Senior Loan Officer
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax