Renovation Mortgage Process: Closing

The closing agent will coordinate final figures and all required documents with the lender’s closing dept. and make sure they are ready for customers to review and sign, including a copy of the final Closing Disclosure that details all final costs of the transaction. A renovation escrow account will be set up by the lender to hold the funds for payout per the program guidelines. Funds disbursement(s) “draws” are managed by the Lender/Servicer. Depending on the Renovation Program utilized some funds may be released at Closing or just after for the Contractor, or paid via the Draw Payment Process which the contractor should have already been made aware of during the Contractor Selection Phase.

• Renovation Loans are fully funded at closing
• With Purchase transactions, sellers receive their net proceeds at funding, and real estate agents are paid.
• With Refinance transactions the existing mortgage is paid off as necessary.
• Proof that any required permits have been obtained may need to be submitted to your lender prior to the start of any work or release of funds to the Contractor.
• The customer will contact the HUD Consultant or Lender Draw Dept. to schedule appointments for each required inspection as necessary.
• The HUD consultant or a third-party inspector must inspect the completed work and submit a Draw Request form signed by the customer, contractor, and the consultant (if applicable) in order for funds to be released.
• The Draw Request form is submitted to the Draw Center and the draw specialist issues a check by mail
• Checks will be made payable to both the customer and the Contractor
• Funds are disbursed with the condition that all work must be started within 30 days of closing, cannot stop for a period of more than 30 days, and must be completed within 4-6 months depending on Renovation Program utilized. Some programs allow as much as 9 months depending on the size of the Project Budget.