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. The great news is that you can always obtain money from lenders. 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. Many people usually seek these constructions loans, but they are denied it because of their ineligibility. Lending companies will only give you a loan if you meet their requirements. The following is a how-to guide for determining whether you can qualify 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. In addition to this, the builder should have a profitability and solid building record. These records should be presented to this company before a loan is issued. Before getting a loan, make sure that you have a licensed builder to get an approval.
Another important thing you need to do is to compile the building details. The finance company needs details of your building apart from the ones of the licensed builder. 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. You should seek more details online on these requirements. You can also consult the building expert.
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. It is also advisable to look for an appraiser to value your home. 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.
Before looking for a construction loan, you also need to have saved for the down payment. 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. Also, you need to prove your ability to repay the loan. This can be done with a credit report. Copies of your current paychecks may be required, and finally, you will be handed over the money.