Determining Your Eligibility for a Construction Loan
When it comes to building or renovating homes, many people love it. 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. This can be taken in the form of a construction loan so that you can build your home. 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. 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. If you haven’t done this, then you should just forget about obtaining the loan now. The reason behind this is that the lender cannot risk their money. The builder has to be profitable and prove this. This proof should be tabled before the lender. Therefore, it is crucial that you get a licensed and professional builder so as to qualify for a loan.
Before looking for a construction loan you need to compile details of the building. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. These details include floor plans, even cost projections, and materials inventories. Your loan will not go through if you don’t do this. Lack of money can challenge you especially if you are new to building. You should seek more details online on these requirements. 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. It is also advisable to look for an appraiser to value your home. Make sure that your builder has compiled your home’s specifications in a Blue Book. One of copy of the blue book should be handed over to the lender for easy processing. 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. The down payment will be paid to the creditor before the loan is disbursed. 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.