A How-to Guide for Determining Whether You Can Qualify for a Construction Loan
When it comes to building or renovating homes, many people love it. 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. 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. The lenders will only give credit to the eligible persons. Read more below on determining your eligibility for a construction loan.
Before searching for a construction loan, you should have a licensed builder. If you haven’t done this, then you should just forget about obtaining the loan now. When there is no licensed builder, the creditor will not be willing to lend you the money. The builder has to be profitable and prove this. This proof should be tabled before the lender. 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. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. They have to see detailed floor plans, even cost projections and comprehensive materials inventories. Your loan will not go through if you don’t do this. This will put you in a fix especially if you don’t have building experience. If you are new in this, you should read more about this online. You can also consult the building expert.
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. 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. 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.
A down payment is another thing that you need to have prior to getting a loan. The down payment will be paid to the creditor before the loan is disbursed. 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. You may also need to provide your paycheck copies.