When using a rehab loan, does the lender send you monthly payments or they wait until the rehab is done?

Howdy Focusonmoney:

My deals are done like this:

Rehab money is escrowed with title company. I turn in draw request as the work is completed and the lender sends out appraiser/inspector to approve the request to make sure the work has been done. The lender then faxes a release to the title company and they funds are released and either wired to my account or a check is cut. Usually all this only takes 4 weeks, no just kidding, just a day or two.

My lender also advances some money up to $5000 with some pictures that demo has started. I bought a pic phone to help with this so I can email the pics to their email address. This is new to me but old hat to many. The newness has worn off a bit.

Anyway hope this helps explain the process a little.

So while all of this is happening, are you still paying the mortgage payments every month or the payments start when you finish the rehab?

Howdy Focusonmoney:

If you borrow money you have to pay interest some time or the other and hard money is around 14%. High but better than a partner most of the time. My HML allows me to pay 4 months up front and deduct it from the loan proceeds as long as the loan is not over 70% of the after appraised value. Actually he insists that the 3 to 4 months payments are paid up front. This is also the mininum interest earned even if paid off in a few weeks