Determining Your Eligibility for a Construction Loan
When it comes to building or renovating homes, many people love it. 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. 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. 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. The reason behind this is that the lender cannot risk their money. The builder has to be profitable and prove this. These records should be presented to this company before a loan is issued. Before getting a loan, make sure that you have a licensed builder to get an approval.
It is vital that you also compile details of the building beforehand. 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. Failure to provide this, your loan will not be approved. This will put you in a fix especially if you don’t have building experience. It is good to get more info. on this from the lender’s website page. An expert builder will also come in handy.
Your home also has to be evaluated and valued before seeking the loan. This will help the lender to know how much to lend to you depending on the value of your home. In this case, an appraiser is needed to come and do a valuation for your home. Make sure that your builder has compiled your home’s specifications in a Blue Book. One of copy of the blue book should be handed over to the lender for easy processing. It will also be helpful to the appraiser.
Before looking for a construction loan, you also need to have saved for the down payment. Even when your loan is approved, most lenders will demand a down payment before disbursing the loan. This is a sign of commitment to the agreement since some borrowers may abandon the project midway and leave them with losses. You also need to show them that you are able to pay back 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.