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. First of all, you need to know if you can qualify for the loan. Many people usually seek these constructions loans, but they are denied it because of their ineligibility. You have to meet the lender’s criteria before getting a loan. Read more below on determining your eligibility for a construction loan.
You need to contract a licensed builder before looking for this loan. If you haven’t done this, then you should just forget about obtaining the loan now. 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. The lender has to see these details before issuing the construction loan. 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. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. These are inventories of building materials, plans of the floor and even cost projections. Failure to provide this, your loan will not be approved. 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. The value of the home will determine how much is lent to you. In this case, an appraiser is needed to come and do a valuation for your home. Make sure that your builder has compiled your home’s specifications in a Blue Book. Before processing the loan, the creditor will need this book. The book can also be used for valuing the home.
A down payment is another thing that you need to have prior to getting a loan. This should be paid to the lender before you get the loan. This is a sign of commitment to the agreement since some borrowers may abandon the project midway and leave them with losses. Also, you need to prove your ability to repay the loan. You may, therefore, be asked to prove this by providing your credit report. You may also need to provide your paycheck copies.