Determining Your Eligibility 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. 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. First of all, you need to know if you can qualify for the loan. If you are not eligible, you may not get the loan. You have to meet the lender’s criteria before getting a loan. 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. Although lender may offer the money for different projects, they can never risk lending money when there is no licensed builder. The builder has to be profitable and prove this. The lender has to see these details before issuing the construction loan. hence, you should have this documentation when going to look 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 are inventories of building materials, plans of the floor and even cost projections. Your loan will not go through if you don’t do this. This will ruin your plans. You should seek more details online on these requirements. An expert builder will also come in handy.
Your home also has to be evaluated and valued before seeking the loan. 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. The home builder should have compiled the blue book already. 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 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.
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