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Determining Your Eligibility for a Construction Loan

When it comes to building or renovating homes, many people love it. 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. Construction loans are usually given for building or renovating your house. 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. 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. When there is no licensed builder, the creditor will not be willing to lend you the money. There should also be a profitability record from the builder. These records should be presented to this company before a loan is issued. Therefore, it is crucial that you get a licensed and professional builder so as to qualify for a loan.

Before looking for a construction loan you need to compile details of the building. The finance company needs details of your building apart from the ones of the licensed builder. 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. You should seek more details online on these requirements. However, a professional builder will also advise you about this.

Your home also has to be evaluated and valued before seeking the loan. 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. 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. It will also be helpful to the appraiser.

Prior to getting this loan, you need to have a down payment ready. 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. A credit report can be used to prove this. Copies of your current paychecks may be required, and finally, you will be handed over the money.