A How-to Guide for Determining Whether You Can Qualify 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. 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. A few people are normally disqualified if they don’t meet the specifications. The lenders will only give credit to the eligible persons. Read more below on determining your eligibility 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 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. There should also be a profitability record from the builder. The lender has to see these details before issuing the construction loan. Before getting a loan, make sure that you have a licensed builder to get an approval.
Before looking for a construction loan you need to compile details of the building. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. These are inventories of building materials, plans of the floor and even cost projections. 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. 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. Before processing the loan, the creditor will need this book. The appraisers also use the blue book to calculate the value of your project.
A down payment is another thing that you need to have prior to getting a loan. 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. Latest paycheck copies may also be necessary to prove this.
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