Yes and No. Some programs may allow you to act as an owner-builder if you are a full-time licensed general contractor. Others may allow you to manage, hire subcontractors and control how, when and to whom the funds are being made if you were to hire a project manager to supervise your project.
When hiring a contractor to build a home or renovate your new fixer-upper, it’s important to obtain several quotes and investigate each contractor’s work before making a final decision:
~ Check with the Better Business Bureau to see if the contractor has accumulated complaints.
~ Make sure the company has sufficient General Liability or Workers Compensation Coverage.
~ Check for quality workmanship in the contractor’s current and past work.
~ Be wary of unexpectedly low bids, which might not cover costs that are certain to develop later.
~. Make sure the company has a permanent address and a good reputation with lenders, subcontractors and vendors.
~ Make sure you receive a clearly written contract and description of material for the work.
~ Builder Application; this form ensures that the building professional is experienced and current and past track record is in good standing.
~ Description of Project Materials; this information describes the materials to be used in the construction of the home, for example, wood shingle roof or lightweight tile, redwood siding, or cedar shingle.
~ Cost Breakdown; this is generally prepared by both the builder and the borrower, which includes the hard costs (lumber, bricks, mortar) and all the soft costs (permits fees, engineering fees, and the land loan balance.)
~ Final Architectural Plans; These consist of a legible set of architectural drawings (building plans) prepared by an architect and approved through city and county planning. They typically include a floor plan showing all dimensions, outside elevations of the building, electrical and plumbing details, and HVAC.
~ Contractor Agreement; a contract between the builder, the borrower, and basic lender previsions that describe the scope of work, project timeline, project cost, and contractor compensation.
~ General Liability Insurance; This insurance protects the General Contractor from lawsuits by sub-contractors due to injury. It also protects you by providing for damage coverage due to negligence. Because most projects include sub-contractors, ensuring that your General Contractor has sufficient liability insurance to shield you from possible claims from these independent contractors is important to protect your investment.
No. The funds go directly to the borrowers checking account which then you may pay the general contractor, subcontractors, and materials from that account directly.
A draw is the method by which funds are taken from the construction budget to pay material suppliers and contractors. As you draw from your construction line-of-credit your loan increases by that amount. You begin making regular monthly payments) Principal, Interest and any required escrow) following the completion of your construction period and after final disbursement had been paid.
Unlike a line-of-credit you would first need to perform the work and then request a reimbursement of funds.
Step 1. Once a draw is requested, draw inspectors visit the worksite to evaluate current progress against what has been reported. They’re looking specifically to validate that all work items and materials included in a draw request are performed and issue a reimbursement in the form of a Draw directly to your checking account.
Step 2. The lender would then collect any lien waivers from General Contractor, Sub-Contractors and material suppliers paid to ensure that no liens have can be placed against the property at a later date.
Yes, with limitations. Items such as Cabinets, windows, modular and kit preorder items with property documentation such as an invoice for the deposit may be considered.
Yes, with limitations. Items such as Cabinets, windows, modular and kit preorder items with property documentation such as an invoice for the deposit may be considered.
Typically, inspections begin upon notification that the foundation is completed and continue throughout construction. With Built, inspections are automatically scheduled after a draw is requested. These inspections are made for the purpose of determining the percentage of completion of the property and that the home is being built in conformance with the plans and specifications submitted.
Each draw requested will be reviewed by the lender along with any required third-party inspections or Lien Releases and the funds will then be wired into your checking account within 2 business days thereafter.
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