When it comes to building or renovating homes, many people love it. However, this can cost you a lot of money, and many people find it a big challenge. Good news is that there are many lenders who can loan you the money. 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. A few people are normally disqualified if they don’t meet the specifications. The lenders will only give credit to the eligible persons. The following is a how-to guide for determining whether you can qualify 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. The lender has to see these details before issuing the construction loan. Therefore, it is crucial that you get a licensed and professional builder so as to qualify for a loan.
Another important thing you need to do is to compile the building details. 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 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. You can also consult the building expert.
Prior to looking for the loan, your home needs to be valued. The value of the home will determine how much is lent to you. In this case, an appraiser is needed to come and do a valuation for 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.
Prior to getting this loan, you need to have a down payment ready. Even when your loan is approved, most lenders will demand a down payment before disbursing the loan. A lender asks for a down payment to prevent losses from people who abandon the project midway. Again, you will need to show that you can 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.