How to Know if You are Eligible for a Construction Loan
For a home to look impressive, many people normally renovate or flip their homes. Nevertheless, many of them usually lack money to undertake these projects. However, you can obtain a loan from the many lenders available. Construction loans are usually given for building or renovating your house. However, you need to assess whether you are eligible for the loan first. If you are not eligible, you may not get the loan. The lenders will only give credit to the eligible persons. Read more here below about knowing if you are eligible for a construction loan from this company that lends the money.
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. 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. 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. Apart from getting a licensed builder, the lender needs some details about the house. 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 ruin your plans. 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 lender will depend on this valuation to know how much to lend 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. The lender will need one copy of the book. The book can also be used for valuing the home.
Before looking for a construction loan, you also need to have saved for the down payment. The down payment will be paid to the creditor before the loan is disbursed. This will act as a commitment and also to avoid losses to the lender. Also, you need to prove your ability to repay the loan. You may, therefore, be asked to prove this by providing your credit report. You may also need to provide your paycheck copies.