Private Construction Loan
Hello all,
Recently I purchased a 3 family fixer upper for $77k, which had an after repair appraised value of $130k.
Due to the sellers circumstances they required a < 1 month turnaround between contract signing and closing. This made conventional financing impractical, and I was instead extended a $96,700 construction loan by a local investor. I placed 10% down on the initial purchase, and with fees (etc) the construction loan available to me is $26,000.
During closing, my lawyer recommended that I make repairs and pay for them, then request a release of the loan money. I've done this and am at the tail end of repairs for this purchase. I'm looking for guidance on how to request a release of the $26,000 that is currently being held as a construction loan - either towards the loan principal or in cash. I am currently paying 12.5% P+I towards the entire loan balance ($96,700 - $1099/month).
Any guidance would be appreciated.
My state is NY and the location is Binghamton, if this is helpful.
@Isaac Atwood. Hi Isaac... do just that ...ask for it... show lender the improvements made. Are all items in the construction loan completed?
Hello Gary,
There were no clear requirements that I'm aware of for the construction loan. I'm nearing the end of repairs and doing some research prior to finalizing them.
-Isaac
As it sounds on your question, is better to take out the money the latest as possible so you are saving on interest but it's depends if you wanna use the money for something else.
Your lender will tell you exactly what they want to see to release the funds.
Hello David,
I never received any information regarding the repairs they would like to see. I dont have any way to contact my lender for information outside of writing them a letter and waiting several weeks for a response. My contract does not obligate them to respond at all if I request information to a request for information, and I do not know my lender at all - i have only interacted with them through the broker who secured my funding, and only provided a mailing address to send my monthly checks.
When I asked the lawyer working with me during the sale what I need to do to request the funds be released they said just to do the work, pay for it, and then request a release of the funds. I dont believe there is any list of required work items in relation to this property.
The main main budget item related to this property is a new heating system. I live in upstate New York, where the pipes will freeze if you dont have heat during this time of year. So, the heating system needed to be finished as soon as possible, and I didnt have time to wait to send letters back and forth with the person lending to me to find out what they needed. Due to these circumstances I had a heating system put in, and paid out of pocket for it. I dont have enough repairs left that they would reach the $26k dollar amount.