A How-to Guide for Determining Whether You Can Qualify for a Construction Loan
Many people love building, renovating or flipping their homes. Nevertheless, many of them usually lack money to undertake these projects. The great news is that you can always obtain money from lenders. The money for building or renovating your house will be given as construction loan. However, you need to assess whether you are eligible for the loan first. If you are not eligible, you may not get the loan. The lenders will only give credit to the eligible persons. The following is a how-to guide for determining whether you can qualify for a construction loan.
Before searching for a construction loan, you should have a licensed builder. You cannot get the loan here if you don’t have this contract. When there is no licensed builder, the creditor will not be willing to lend you the money. The builder has to be profitable and prove this. This proof should be tabled before the lender. Therefore, it is crucial that you get a licensed and professional builder so as to qualify for a loan.
It is vital that you also compile details of the building beforehand. 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. An expert builder will also come in handy.
It is also necessary that you have your home appraised before looking for a construction loan. This will help the lender to know how much to lend to you depending on the value of your home. In this case, an appraiser is needed to come and do a valuation for your home. The home builder should have compiled the blue book already. Before processing the loan, the creditor will need this book. It will also be helpful to the appraiser.
Prior to getting this loan, you need to have a down payment ready. 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. Also, you need to prove your ability to repay the loan. This can be done with a credit report. You may also need to provide your paycheck copies.