Determining Your Eligibility for a Construction Loan
Many people love building, renovating or flipping their homes. However, in most cases only one thing will stand in your way, and that is money. However, you can obtain a loan from the many lenders available. 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. If you are not eligible, you may not get the loan. 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. 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.
Another important thing you need to do is to compile the building details. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. These are inventories of building materials, plans of the floor and even cost projections. Your loan will not go through if you don’t do this. This will ruin your plans. It is good to get more info. on this from the lender’s website page. An expert builder will also come in handy.
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. In this case, an appraiser is needed to come and do a valuation for your home. You need a blue book compiled for your home. Before processing the loan, the creditor will need this book. 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. 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.