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. Before seeking for this construction loan, it is important that you ask yourself if you qualify for this service. Many people usually seek these constructions loans, but they are denied it because of their ineligibility. 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.
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. 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. Apart from getting a licensed builder, the lender needs some details about the house. These details include floor plans, even cost projections, and materials inventories. Your loan will not go through if you don’t do this. 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. 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. One of copy of the blue book should be handed over to the lender for easy processing. The book can also be used for valuing the home.
A down payment is another thing that you need to have prior to getting a loan. Even when your loan is approved, most lenders will demand a down payment before disbursing the loan. A lender asks for a down payment to prevent losses from people who abandon the project midway. You also need to show them that you are able to pay back the loan. A credit report can be used to prove this. Latest paycheck copies may also be necessary to prove this.