How to Know if You are Eligible for a Construction Loan
For a home to look impressive, many people normally renovate or flip 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. If you are not eligible, you may not get the loan. The lenders will only give credit to the eligible persons. 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. You cannot get the loan here if you don’t have this contract. The reason behind this is that the lender cannot risk their money. In addition to this, the builder should have a profitability and solid building record. 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. The finance company needs details of your building apart from the ones of the licensed builder. These details include floor plans, even cost projections, and materials inventories. 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. An expert builder will also come in handy.
It is also necessary that you have your home appraised before looking for a construction loan. The value of the home will determine how much is lent 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. One of copy of the blue book should be handed over to the lender for easy processing. It will also be helpful to the appraiser.
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. A lender asks for a down payment to prevent losses from people who abandon the project midway. Again, you will need to show that you can repay the loan. This can be done with a credit report. You may also need to provide your paycheck copies.