Many people try to secure funding for their building projects and are turned away. Loans are competitive across the board, but getting a construction loan can be particularly difficult. Lenders put a tremendous amount of faith into builders when they finance a construction project, so a loan applicant has to earn their trust in order to get approved. With that in mind, it’s important to focus on what you can do to set yourself apart from the other people trying to get access to the same money you’re after.
Be Painfully Specific
It’s not a good practice to leave anything up to the lender’s imagination. If you can’t offer a clear proposal for exactly how the money will be spent and the building will be built, you shouldn’t plan on getting approved for a construction loan. However, if you’re able to detail how the project will be handled, who will be doing what, and when completion can be expected, your loan application will earn much better consideration. Construction is hard work and lenders know this, so you should put forth every effort to prove that they’re sending money to a capable party.
Have Money to Put Down
Lenders often want to see 20 or even 25 percent up front before approving a loan. If at all possible, try to put together some money to prove that you’re invested in the project. It might be worth asking friends and family to subsidize your loan request to show that you’re a serious applicant willing to put your money where your mouth is. If the lender has any reason to believe that you have doubts about your project, its extremely unlikely that they’ll approve your construction loan. Any steps you can […]