What Is a Progressive Draw Fee?
When a homebuyer, investor, or owner-builder applies for financing, they incur a series of fees during the application process. They also incur fees during the loan period and at the closing stage. Fees cover the administrative costs of processing an application, service the loan, and verifying information. Construction loans incur a few fees. Plus, they operate differently than mortgages. For example, the loans incur the progressive draw fee.
Construction projects take place in stages. Therefore, lenders disburse payments in stages too. Most builders expect payments in five increments. Every time they complete a milestone, they can request payment. Lenders expect them to submit paperwork to prove that they completed the milestone. They process the paperwork and verify the information. Once everything checks out, the lender sends out the payment. The administrative work that takes place incurs the fee. Lenders add the draw fee to the end of the loan. Therefore, the applicant pays them together at the end.
Mortgage House is among the lenders that follow standard protocols for construction loans. Our loan specialists guide owner-builders and investors through the details. In addition, our team helps homebuyers obtain the mortgage choice that fits their homeownership goals. We provide a range of loan products including low doc, guarantor, and conventional mortgages to homebuyers. Each home loan has a purpose. Thus, plenty of opportunities to become homeowners exist.
Progressive Draw Fee Conclusion
Lenders charge a progressive draw fee every time a borrower requests a milestone payment. Mortgage House loan specialists can outline other fees applicants will incur from any of our products. Contact our team today.