After the loan funds the money for the home improvements is placed into a separate Escrow Account. Then after funding the construction work begins and draws are paid (usually to a General Contractor) as the improvements are being done to the home. Most 203(k) loans involve a Trained and Approved 203(k) Home Inspector (or “Consultant”) who inspects the construction work as it is done and who also approves the draw requests.
There are some differences between Purchase Loans and Refinance 203(k)’s. For more info go to the Purchase vs Refinance 203(k) segment of the MORE INFO section.
[For an Approved 203(k) Lender click here or call 888-299-4484]