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Submitting Draw Requests for Fix & Flip or New Construction Loans
Once you’ve closed your fix and flip or new construction loan, the next exciting step is to start construction! As you complete work on your project, you will want to draw funds from your loan to pay for the work that’s been completed. To do this, you will submit a Draw Request to your lender.
Draw Schedule and Construction Budget
Before closing your loan, you or your contractor will provide the lender with an itemized work schedule and the associated costs. This will be detailed on a Draw Schedule, which will be the basis for submitting future draw requests.
Most loans permit between three and six draw requests, though more complex projects may allow for additional draws. If you need more draws than anticipated, your lender might approve them, but additional fees may be charged to cover the lender’s higher administrative costs.
Draw Requests on Construction Loans
When submitting a draw, you will need to complete a Draw Request form, detailing the work completed and its cost. Keep the following in mind when completing your draw request:
Inspections for Construction Loans
After receiving your Draw Request, your lender will schedule a property inspection to confirm that the listed work has been completed. This inspection is typically scheduled within two or three days of your request.
Once the inspection photos are reviewed, the lender will assess the amount of work completed and issue the corresponding draw. If any listed items are incomplete, the amount released will be reduced. You can resubmit those items in future draw requests once they are completed.
How Long Does the Loan Draw Process Take?
If there are no issues, most draws are processed and paid within three to five business days. To expedite the process, ensure your Draw Request aligns with the original Draw Schedule and budget. Accurate submissions will make the lender’s job easier, leading to quicker disbursement of funds.