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. Good news is that there are many lenders who can loan you the money. 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. There should also be a profitability record from the builder. The lender has to see these details before issuing the construction loan. Therefore, it is crucial that you get a licensed and professional builder so as to qualify for a loan.
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. They have to see detailed floor plans, even cost projections and comprehensive materials inventories. If you don’t give these details, they will assume that you are hiding something and reject your application. This will ruin your plans. If you are new in this, you should read more about this online. You can also consult the building expert.
Prior to looking for the loan, your home needs to be valued. 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. 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. It will also be helpful to the appraiser.
Before looking for a construction loan, you also need to have saved for the down payment. This should be paid to the lender before you get the loan. 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.