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, this can cost you a lot of money, and many people find it a big challenge. The great news is that you can always obtain money from lenders. This can be taken in the form of a construction loan so that you can build your home. However, you need to assess whether you are eligible for the loan first. If you are not eligible, you may not get the loan. Lending companies will only give you a loan if you meet their requirements. Read more below on determining your eligibility for a construction loan.
You need to contract a licensed builder before looking for this loan. You will not be given any loan if there is no contract with a licensed builder. The reason behind this is that the lender cannot risk their money. There should also be a profitability record from the builder. 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 are inventories of building materials, plans of the floor and even cost projections. 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. 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. 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. The lender will need one copy of the book. 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. Even when your loan is approved, most lenders will demand a down payment before disbursing the loan. This will act as a commitment and also to avoid losses to the lender. Also, you need to prove your ability to repay the loan. You may, therefore, be asked to prove this by providing your credit report. You may also need to provide your paycheck copies.