Determining Your Eligibility for a Construction Loan
When it comes to building or renovating homes, many people love it. 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. Construction loans are usually given for building or renovating your house. First of all, you need to know if you can qualify for the loan. A few people are normally disqualified if they don’t meet the specifications. Lending companies will only give you a loan if you meet their requirements. 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. If you haven’t done this, then you should just forget about obtaining the loan now. The reason behind this is that the lender cannot risk their money. The builder has to be profitable and prove this. 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. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. 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. 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. 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. Make sure that your builder has compiled your home’s specifications in a Blue Book. Before processing the loan, the creditor will need this book. It will also be helpful to the appraiser.
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. This is a sign of commitment to the agreement since some borrowers may abandon the project midway and leave them with losses. Again, you will need to show that you can repay the loan. A credit report can be used to prove this. You may also need to provide your paycheck copies.
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