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Determining Your Eligibility 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. 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. However, you need to assess whether you are eligible for the loan first. A few people are normally disqualified if they don’t meet the specifications. You have to meet the lender’s criteria before getting a loan. Read more below on determining your eligibility for a construction loan.

Before searching for a construction loan, you should have 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. These records should be presented to this company before a loan is issued. hence, you should have this documentation when going to look for a loan.

It is vital that you also compile details of the building beforehand. The finance company needs details of your building apart from the ones of the licensed builder. These details include floor plans, even cost projections, and materials inventories. Failure to provide this, your loan will not be approved. Lack of money can challenge you especially if you are new to building. You should seek more details online on these requirements. An expert builder will also come in handy.

Your home also has to be evaluated and valued before seeking the 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. The home builder should have compiled the blue book already. 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. Again, you will need to show that you can repay the loan. This can be done with a credit report. Copies of your current paychecks may be required, and finally, you will be handed over the money.