A How-to Guide for Determining Whether You Can Qualify for a Construction Loan
Many people love building, renovating or flipping their homes. However, this can cost you a lot of money, and many people find it a big challenge. Good news is that there are many lenders who can loan you the money. This can be taken in the form of a construction loan so that you can build your home. However, you need to assess whether you are eligible for the loan first. If you are not eligible, you may not get the loan. You have to meet the lender’s criteria before getting a loan. Read more below on determining your eligibility for a construction loan.
When looking for a construction loan, the first question you need to ask yourself is whether you have contracted a licensed builder. You will not be given any loan if there is no contract with a licensed builder. Although lender may offer the money for different projects, they can never risk lending money when there is no licensed builder. In addition to this, the builder should have a profitability and solid building record. This proof should be tabled before the lender. Before getting a loan, make sure that you have a licensed builder to get an approval.
Before looking for a construction loan you need to compile details of the building. The finance company needs details of your building apart from the ones of the licensed builder. These details include floor plans, even cost projections, and materials inventories. If you don’t give these details, they will assume that you are hiding something and reject your application. Lack of money can challenge you especially if you are new to building. If you are new in this, you should read more about this online. However, a professional builder will also advise you about this.
Your home also has to be evaluated and valued before seeking the loan. The lender will depend on this valuation to know how much to lend to you. It is also advisable to look for an appraiser to value your home. Make sure that your builder has compiled your home’s specifications in a Blue Book. One of copy of the blue book should be handed over to the lender for easy processing. It will also be helpful to the appraiser.
A down payment is another thing that you need to have prior to getting a loan. The down payment will be paid to the creditor before the loan is disbursed. This will act as a commitment and also to avoid losses to the lender. Again, you will need to show that you can repay the loan. A credit report can be used to prove this. Latest paycheck copies may also be necessary to prove this.