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How do you draw your construction loan funds to build your new home?

There are two methods that banks use to make sure your builder gets paid while building your home.

The Voucher Reimbursement system has been around for quite a while. As usual you'll have some builders that are very familiar with this method of payment and do not like change. Most builders are really only concerned with how fast they can be paid and how often they can be paid.

The Draw Reimbursement system is becoming the standard for construction loan funding for most banks. The main difference is that the bank puts the accounting responsibility on you or your contractor. The bank uses your cost breakdown as the guide for the draws. The modern day draw system is set up for builders to request as many draws as needed as long as the work is completed.

The draw systems also allow the choice of taking draws on a bi-weekly or monthly basis, collecting partial payment for work and material items that have been completed.

Most customers usually prefer the draw reimbursement system because:

1. It requires less work.
2. Provides more control for both the customer and the builder.
3. The funds are wired directly into your bank account or the builders.

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