Building your dream home will be a fun-filled and a wonderful experience. However, it can be a very long process too! Not to forget, building homes is an expensive venture most people cannot afford to pay for. Are you wondering how to construct a loan without credit? If your credit score is very low, you will have a tough time qualifying for the loan. After all, lenders and banks look for candidates with very high credit scores. If a standard mortgage lender cuts you out, you should make use of bridge or hard money loans. These are special loans that fill the gap conventional construction loans create.
What are construction loans?
So, what are construction loans in the first place? As suggested by its name, construction loans are short term loans that can pay for the cost of your building. These loans are offered for a predetermined period of time. In most cases the loan will last between 6 to 12 months. By the end of construction, you should acquire a different loan to pay the current one! This is also known as the end loan, bridge loan or the hard money loan. If you wish to improve your credit score, repayment plays a very important role! That is why a lot of customers opt for bridge/hard money loans.
How do bankers work?
Conventional mortgage lenders and banks tend to leery of construction loan applications. There are several reasons behind this move! In most cases, banks and lenders don’t trust the applicant or the builder. After all, the financial institution is funding for something that is ought to be done! If things don’t go as planned, the financial institution has made a bad move/investment. In simpler terms, the property was not worth their time. Above all, banks don’t turn towards clients with poor credits. Luckily, hard money loan lenders are here to push you forward and help you with the construction.
A Strong hand of help
To qualify for the hard money loan, you should have a detailed specification of the property to be built. Make sure you know everything about the building. This includes details of the materials, floor plans, insulation and many more things. Builders refer to these details as a blue book. If you have a comprehensive blue book, you will not have much issues qualifying for the bridge loan.