How do construction loans work
I'm thinking of having a new home built. I was wondering how to construction loans work. I know there are draws but who actually has control of the money? The bank, the contractor or the home owner? I have never built before and was curious how everyone gets paid.
I've never had a construction loan, but I have gotten paid thru them. From my experience the bank controls the money i that no distributions are made until they receive an invoice, and generally they want it fairly detailed as to the scope of work which was performed and definitely want a lien waiver signed by the contractor prior to cutting a check. In some cases the home owner must physically go the bank and turn in the invoice and the checks require both the owners signature and a counter signature from the banker befoe they are valid. I believe alot depends on the bank you're working with and that's probably the best place to start to gather real pertinent infromation on the subject. Hope that helps a bit.
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