Many people love building, renovating or flipping 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. 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. Lending companies will only give you a loan if you meet their requirements. The following is a how-to guide for determining whether you can qualify for a construction loan.
Before searching for a construction loan, you should have a licensed builder. You cannot get the loan here if you don’t have this contract. Although lender may offer the money for different projects, they can never risk lending money when there is no licensed builder. The builder has to be profitable and prove this. This proof should be tabled before the lender. Before getting a loan, make sure that you have a licensed builder to get an approval.
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. 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. You should seek more details online on these requirements. However, a professional builder will also advise you about this.
It is also necessary that you have your home appraised before looking for a construction loan. This will help the lender to know how much to lend to you depending on the value of your home. If you are building a new home, you need to hire an appraiser to do the valuation for you. 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. It will also be helpful to the appraiser.
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. A lender asks for a down payment to prevent losses from people who abandon the project midway. Also, you need to prove your ability to repay 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.