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Determining Your Eligibility for a Construction Loan

Many people love building, renovating or flipping their homes. However, in most cases only one thing will stand in your way, and that is money. However, you can obtain a loan from the many lenders available. 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. Lending companies will only give you a loan if you meet their requirements. Read more here below about knowing if you are eligible for a construction loan from this company that lends the money.

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. The reason behind this is that the lender cannot risk their money. The builder has to be profitable and prove this. These records should be presented to this company before a loan is issued. 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. Other than only hiring a licensed contractor, you have to provide particular details regarding your project. 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. Lack of money can challenge you especially if you are new to building. You should seek more details online on these requirements. However, a professional builder will also advise you about this.

Prior to looking for the loan, your home needs to be valued. 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. Make sure that your builder has compiled your home’s specifications in a Blue Book. The lender will need one copy of the book. It will also be helpful to the appraiser.

A down payment is another thing that you need to have prior to getting a loan. 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. You also need to show them that you are able to pay back 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.

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