Many people love building, renovating or flipping their homes. However, in most cases only one thing will stand in your way, and that is money. The great news is that you can always obtain money from lenders. This can be taken in the form of a construction loan so that you can build your home. However, you need to assess whether you are eligible for the loan first. If you are not eligible, you may not get the loan. Lending companies will only give you a loan if you meet their requirements. 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. 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. This proof should be tabled before the lender. Therefore, it is crucial that you get a licensed and professional builder so as to qualify for a loan.
Before looking for a construction loan you need to compile details of the building. The finance company needs details of your building apart from the ones of the licensed builder. These details include floor plans, even cost projections, and materials inventories. If you don’t give these details, they will assume that you are hiding something and reject your application. Lack of money can challenge you especially if you are new to building. You should seek more details online on these requirements. You can also consult the building expert.
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. 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.
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. 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. Latest paycheck copies may also be necessary to prove this.