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. 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. Before seeking for this construction loan, it is important that you ask yourself if you qualify for this service. 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 here below about knowing if you are eligible for a construction loan from this company that lends the money.
You need to contract a licensed builder before looking for this loan. You cannot get the loan here if you don’t have this contract. The reason behind this is that the lender cannot risk their money. 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.
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 are inventories of building materials, plans of the floor and even cost projections. Failure to provide this, your loan will not be approved. This will put you in a fix especially if you don’t have building experience. If you are new in this, you should read more about this online. However, a professional builder will also advise you about this.
Prior to looking for the loan, your home needs to be valued. This will help the lender to know how much to lend to you depending on the value of your home. If you are building a new home, you need to hire an appraiser to do the valuation for you. 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 appraisers also use the blue book to calculate the value of your project.
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 is a sign of commitment to the agreement since some borrowers may abandon the project midway and leave them with losses. You also need to show them that you are able to pay back 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.