Existing or resale homes are the most common type of sales. Proposed / new construction is a valuable resource for locating a home. In the case of proposed construction, certain financing programs offer assistance with the down payment and other costs, which can be gained through sweat equity. The borrower’s labor may be considered as the equivalent of cash if the borrower can demonstrate his or her ability to complete the work in a satisfactory manner. The lender must document the contributory value of the labor through either the appraiser’s estimate or through a cost estimating service.

However, delayed work, clean up, debris removal and other general maintenance cannot be included as sweat equity. There can be no cash back to the borrower in these transactions. Sweat equity on a property other than the property being purchased is not acceptable. Compensation for work performed on other properties must be in cash and be properly documented.

If materials are furnished by the borrower, evidence of the source of funds used to purchase and the market value of the material must be provided. The sales contract must indicate the tasks to be performed by the homebuyer during construction.

Copyright © 1997-2007, Prime Lend America Mortgage Corporation. - All rights reserved.
Please Read our Privacy Statement
Equal Opportunity Lender and Employer
Loan programs, rates and fees subject to change without prior notice.
A federal approved Lending Institution

Design and Hosting by DMNI