By applying the example that follows, a lender or third party appraiser  will inspect the project at certain points in time and utilize the inspection report to determine how much has been completed and how much of the project remains outstanding.

This is important when a construction mortgage lender is reviewing a draw request in that the lender will always make sure there are sufficient funds retained to complete the job and if the draw requested has not completed enough specific stages of the project, then its likely the construction draw will be reduced.

Here is an example of a lender inspection report.

Inspection Report Example
Stages Assessed	% Applied	% Complete
Excavation	2
Foundation	12
Sub-Floor	1
Framing – Begin	10
Framing – End	10
Roof	3
Doors / Windows	8
Soffits / Facia / Eaves	1
RI Electrical	2
RI Plumbing	2
RI Heating	1
Basement Floor	2
Insulation / Vapour Barrier	1
Heating Equipment	2
Drywall / Primer	7
Interior Doors / Casing	3
Cabinetry / Counters	6
Paint / Stain	7
Flooring	6
Finish Electrical	1
Finish Plumbing	2
Exterior Finishing	8
Concrete Work	2
Grading / Decks / Landscaping	1
TOTAL 100	100

From a borrower and/or builder point of view,  the inspection report allows you to make sure the expected work for any particular draw is going to be completed on time.

Its also important to make sure that stages are completed prior to an inspection if possible to avoid an arbitrary assessment of how much is left to be done at a particular stage which could also lead to a draw reduction.

To be clear, if a draw does get reduced for whatever reason, that means there are now less funds available from the construction loan to pay the bills incurred to date.  The short fall will have to be made up with another source of funds which hopefully can be done in a timely manner so the overall project does not get delayed in any way.

While the description of the stages and percentages applied may vary among lenders, the example provided is pretty representative of what you will expect with a home construction project.

If you’re trying to locate and secure construction financing, I recommend that you give me a call so that I can quickly assess your situation and outline relevant options that can work for your project.

Click Here To Speak With Construction Mortgage Broker Joe Walsh

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