A How-to Guide for Determining Whether You Can Qualify for a Construction Loan
Many people love building, renovating or flipping their homes. However, in most cases only one thing will stand in your way, and that is money. 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.
When looking for a construction loan, the first question you need to ask yourself is whether you have contracted 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. 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. 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. Apart from getting a licensed builder, the lender needs some details about the house. They have to see detailed floor plans, even cost projections and comprehensive materials inventories. Failure to provide this, your loan will not be approved. This will ruin your plans. It is good to get more info. on this from the lender’s website page. An expert builder will also come in handy.
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. If you are building a new home, you need to hire an appraiser to do the valuation for you. The home builder should have compiled the blue book already. The lender will need one copy of the book. The book can also be used for valuing the home.
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. Again, you will need to show that you can repay the loan. A credit report can be used to prove this. Latest paycheck copies may also be necessary to prove this.