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. This can be taken in the form of a construction loan so that you can build your home. First of all, you need to know if you can qualify for the loan. Many people usually seek these constructions loans, but they are denied it because of their ineligibility. 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. You will not be given any loan if there is no contract with a licensed builder. Although lender may offer the money for different projects, they can never risk lending money when there is no licensed builder. There should also be a profitability record from the builder. 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.
It is vital that you also compile details of the building beforehand. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. 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. This will put you in a fix especially if you don’t have building experience. You should seek more details online on these requirements. An expert builder will also come in handy.
Prior to looking for the loan, your home needs to be valued. The lender will depend on this valuation to know how much to lend 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. The appraisers also use the blue book to calculate the value of your project.
Before looking for a construction loan, you also need to have saved for the down payment. 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. You also need to show them that you are able to pay back the loan. You may, therefore, be asked to prove this by providing your credit report. Copies of your current paychecks may be required, and finally, you will be handed over the money.