A How-to Guide for Determining Whether You Can Qualify for a Construction Loan
Many people love building, renovating or flipping their homes. However, this can cost you a lot of money, and many people find it a big challenge. Good news is that there are many lenders who can loan you the money. This can be taken in the form of a construction loan so that you can build your home. First of all, you need to know if you can qualify for the loan. If you are not eligible, you may not get the loan. You have to meet the lender’s criteria before getting a loan. The following is a how-to guide for determining whether you can qualify for a construction loan.
When looking for a construction loan, the first question you need to ask yourself is whether you have contracted a licensed builder. You will not be given any loan if there is no contract with a licensed builder. 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. These records should be presented to this company before a loan is issued. 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. 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. If you are new in this, you should read more about this online. An expert builder will also come in handy.
Prior to looking for the loan, your home needs to be valued. 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. The lender will need one copy of the book. It will also be helpful to the appraiser.
A down payment is another thing that you need to have prior to getting a loan. This should be paid to the lender before you get the loan. 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. Copies of your current paychecks may be required, and finally, you will be handed over the money.
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