How to Know if You are Eligible for a Construction Loan
When it comes to building or renovating homes, many people love it. However, this can cost you a lot of money, and many people find it a big challenge. However, you can obtain a loan from the many lenders available. This can be taken in the form of a construction loan so that you can build your home. 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. The lenders will only give credit to the eligible persons. The following is a how-to guide for determining whether you can qualify 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 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. The builder has to be profitable and prove this. 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.
Another important thing you need to do is to compile the building details. Apart from getting a licensed builder, the lender needs some details about the house. 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 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. However, a professional builder will also advise you about this.
Prior to looking for the loan, your home needs to be valued. 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. 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. This should be paid to the lender before you get the loan. 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. This can be done with a credit report. Copies of your current paychecks may be required, and finally, you will be handed over the money.