If you are planning to build your own home, you may be concerned about acquiring the home construction loans you need to manage this process successfully. A number of different options are available in the financial marketplace to help you achieve your goals. For those who cannot qualify for traditional loans, alternative lenders can sometimes provide added help and support throughout the construction process. Here are some proven strategies that can help you qualify for the residential construction loans you need to build the home of your dreams.
Clean Up Your Credit
If you have any outstanding debts or defaults, making an effort to deal with these issues now can expand the range of options available to you in the home mortgage marketplace. Lenders look at your credit history to determine if you are a good candidate for all types of loans. By disputing any incorrect items on your credit report and paying off any outstanding bad debts, you can present yourself as a better candidate for new construction loans.
Get Pre-Approved
Sitting down with a lending specialist can provide you with a better idea of your price range. This can help save you valuable time when looking at your options in the current real estate market. By ensuring that you have a good idea of the amount you can afford, you can determine which of your building options is the most practical and suitable for your needs.
Put Down a Healthy Down Payment
Because construction projects are usually considered higher-risk investments by lenders, you may be required to put down a larger down payment than would be necessary for an existing home. By saving up a significant amount for the down payment on these residential construction loans, you can demonstrate that you are a lower risk for lenders, which can increase your odds of acquiring the funding you need for your new home.
Consider the Alternatives
Don’t overlook the available alternatives to traditional home construction loans. Some of these include loans and gifts from family members, two-step mortgages and securities-backed mortgages. The latter is increasing in popularity due to an unwillingness on the part of major lenders to take on the risks associated with less-than-perfect credit. By leveraging the financial power of your investment portfolio, you may be able to build the home you want even without a pristine credit record or a huge down payment.
Location Matters
Choosing the right location can help you ensure the highest valuation for your proposed building project. This can help you demonstrate the value of your proposed collateral, allowing you to access the construction loans you need to build your home in an area with the potential for future appreciation and growth.
Working with a firm that specializes in alternative lending options for homeowners and investors can often provide you with the most comprehensive range of choices when building your own home. These companies can often help you find a loan that works for you at rates you can afford, allowing you to achieve your dream of homeownership even without perfect credit.
If interested in working with an alternative lending firm for obtaining a residential home construction loan in the states of Arizona, California, Idaho, Nevada, Oregon or Washington, contact ReProp Financial today!
