Buying partially finished house
We are considering buying a partially finished house.
We have agreed upon a price with the current builder based on his existing plans that he has for finishing the house. A contract will be signed before moving forward further.
The builder currently has a line of credit with a local bank. I assume he stopped building due to the bank not wanting to lend out more money or to save on interest.
The builder has suggested that he could save on interest if we put part of our down payment with a title company and allow him to take disbursements on it. He said the advantage to this is it saves interest which he could split with us on a few upgrades and also saves time as the bank takes longer to approve draws.
Is this common? Does it pose unnecessary risks even if done through a title company? Other suggestions?