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. 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.
You need to contract a licensed builder before looking for this loan. You cannot get the loan here if you don’t have this contract. 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. The lender has to see these details before issuing the construction loan. 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. 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. If you don’t give these details, they will assume that you are hiding something and reject your application. This will put you in a fix especially if you don’t have building experience. You should seek more details online on these requirements. However, a professional builder will also advise you about this.
It is also necessary that you have your home appraised before looking for a construction loan. The lender will depend on this valuation to know how much to lend to you. It is also advisable to look for an appraiser to value your home. The home builder should have compiled the blue book already. The lender will need one copy of the book. It will also be helpful to the appraiser.
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. 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. A credit report can be used to prove this. You may also need to provide your paycheck copies.