How to Know if You are Eligible for a Construction Loan
Many people love building, renovating or flipping their homes. Nevertheless, many of them usually lack money to undertake these projects. 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. 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. Lending companies will only give you a loan if you meet their requirements. Read more below on determining your eligibility for a construction loan.
You need to contract a licensed builder before looking for this loan. You will not be given any loan if there is no contract with a licensed builder. 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. These records should be presented to this company before a loan is issued. 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. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. They have to see detailed floor plans, even cost projections and comprehensive 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. However, a professional builder will also advise you about this.
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. It is also advisable to look for an appraiser to value 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. The book can also be used for valuing the home.
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. 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.