Determining Your Eligibility for a Construction Loan
Many people love building, renovating or flipping their homes. Nevertheless, many of them usually lack money to undertake these projects. Good news is that there are many lenders who can loan you the money. Construction loans are usually given for building or renovating your house. 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. You have to meet the lender’s criteria before getting a loan. 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. 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. Apart from getting a licensed builder, the lender needs some details about the house. They have to see detailed floor plans, even cost projections and comprehensive materials inventories. If you don’t give these details, they will assume that you are hiding something and reject your application. Lack of money can challenge you especially if you are new to building. You should seek more details online on these requirements. An expert builder will also come in handy.
Your home also has to be evaluated and valued before seeking the loan. The value of the home will determine how much is lent 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. The lender will need one copy of the book. The book can also be used for valuing the home.
Prior to getting this loan, you need to have a down payment ready. Even when your loan is approved, most lenders will demand a down payment before disbursing the loan. This is a sign of commitment to the agreement since some borrowers may abandon the project midway and leave them with losses. Again, you will need to show that you can repay the loan. A credit report can be used to prove this. Copies of your current paychecks may be required, and finally, you will be handed over the money.