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. However, you can obtain a loan from the many lenders available. 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. A few people are normally disqualified if they don’t meet the specifications. The lenders will only give credit to the eligible persons. 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. When there is no licensed builder, the creditor will not be willing to lend you the money. There should also be a profitability record from the builder. This proof should be tabled before the lender. Before getting a loan, make sure that you have a licensed builder to get an approval.
Another important thing you need to do is to compile the building details. 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. Your loan will not go through if you don’t do this. This will put you in a fix especially if you don’t have building experience. You should seek more details online on these requirements. You can also consult the building expert.
Your home also has to be evaluated and valued before seeking the loan. This will help the lender to know how much to lend to you depending on the value of your home. It is also advisable to look for an appraiser to value your home. You need a blue book compiled for your home. One of copy of the blue book should be handed over to the lender for easy processing. The book can also be used for valuing the home.
Prior to getting this loan, you need to have a down payment ready. Even when your loan is approved, most lenders will demand a down payment before disbursing the loan. 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. Copies of your current paychecks may be required, and finally, you will be handed over the money.