– Getting Started & Next Steps

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, in most cases only one thing will stand in your way, and that is money. Good news is that there are many lenders who can loan you the money. This can be taken in the form of a construction loan so that you can build your home. However, you need to assess whether you are eligible for the loan first. If you are not eligible, you may not get the loan. Lending companies will only give you a loan if you meet their requirements. Read more below on determining your eligibility for a construction loan.

You need to contract a licensed builder before looking for this loan. 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. 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. 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. It is good to get more info. on this from the lender’s website page. You can also consult the building expert.

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. 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. It will also be helpful to the appraiser.

Before looking for a construction loan, you also need to have saved for the down payment. Even when your loan is approved, most lenders will demand a down payment before disbursing the loan. This is a sign of commitment to the agreement since some borrowers may abandon the project midway and leave them with losses. Also, you need to prove your ability to repay the loan. This can be done with a credit report. You may also need to provide your paycheck copies.