- Borrowing on the value of the land in order to finance the construction of a building. A land draw provides a borrower access to funds at specific points in a construction project's progress. Also known as a "progress draw," or "construction draw."
construction draw, progress draw
Related Terms and Acronyms
- Construction Loan — Definition,
- A short-term interim loan for financing the cost of construction. The lender makes payments to the builder at periodic intervals as the work progresses.
- Draw Mortgage (DM) — Acronym,
➥ See Progress Advance Mortgage (PAM).
- A periodic payment made to a construction contractor or subcontractor as work progresses. A draw is part of a construction mortgage.
- Interim Financing — Definition,
- The availability of funds on a daily basis to assist a developer with financing for a construction project between advances made by the lender of the construction loan.
- Lien Holdback — Definition,
- The practice of mortgagees withholding up to 15% of mortgage monies advanced on new construction.
- Loan — Definition,
- Letting another party use something of value temporarily.
- Mortgage (mtg) — Abbreviation, Important,
- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- Standby Commitment — Definition,
- A commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.