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. However, this can cost you a lot of money, and many people find it a big challenge. The great news is that you can always obtain money from lenders. The money for building or renovating your house will be given as construction loan. However, you need to assess whether you are eligible for the loan first. A few people are normally disqualified if they don't meet the specifications. 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 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. In addition to this, the builder should have a profitability and solid building record. These records should be presented to this company before a loan is issued. hence, you should have this documentation when going to look 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 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. Lack of money can challenge you especially if you are new to building. 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 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. You need a blue book compiled for your home. 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.
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. You also need to show them that you are able to pay back the loan. A credit report can be used to prove this. Latest paycheck copies may also be necessary to prove this.