Many people love building, renovating or flipping their homes. Nevertheless, many of them usually lack money to undertake these projects. The great news is that you can always obtain money from lenders. 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. 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.
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. 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. This proof should be tabled before the lender. hence, you should have this documentation when going to look 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. They have to see detailed floor plans, even cost projections and comprehensive materials inventories. If you don’t give these details, they will assume that you are hiding something and reject your application. This will ruin your plans. You should seek more details online on these requirements. However, a professional builder will also advise you about this.
Your home also has to be evaluated and valued before seeking the loan. The lender will depend on this valuation to know how much to lend to you. If you are building a new home, you need to hire an appraiser to do the valuation for you. Make sure that your builder has compiled your home’s specifications in a Blue Book. 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. This should be paid to the lender before you get 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. You may, therefore, be asked to prove this by providing your credit report. You may also need to provide your paycheck copies.