As a Draw Inspector I can tell you that different lenders require different things. The one's I've worked for require an inspection, which you pay for, every time a Draw for more money is requested. There can be anywhere from 3-5 draws, I charge $100 each.
The inspection requires a walk-through of the property along with documentation (draw request form or equivilant) & 15+ photos showing percentages of work being completed at every draw. Before the final or closing draw is released all work must be 100% complete. Also, at each draw an estimation of the dollar amount of the repairs is given. If work was intended in the beginning but plans changed and the work wasn't done you don't get the money alotted for that project. Such as reusing cabinets instead of buying new ones. If unforseen work is needed a Work Change Order can be requested by the contractor. There is also a 10% hold back in case the project runs over budget.... more
Is there a reason that these funds are not available once the project is final? My loan officer is telling me that the contingency reserve could be 10, 15, or even 20% of the total renovation cost. I'm trying to keep the renovation costs as low as possible in order to keep my mortgage payment low. It would be great to be able to use these funds. I guess I could always leave some "unforeseen items" out of the cost estimate.... more