Your Home Improvement Loan and Finding A Good Contractor

With home design shows like Trading Spaces, Extreme Home Makeover and others ruling the ratings, many people have developed design fever. The quickest way to slake that thirst is with a home improvement loan, also known as a home equity loan.

A home improvement loan lets you use the equity in your home to fix it up. Equity is the cash difference between what your house is worth on the market and what you still owe on the mortgage. This loan gives you cash up front so that you can afford to make your house look exactly the way you want. When shopping for a loan, make sure to:

* Get multiple home improvement loan quotes from lenders so you can get the best rates

* Check your free credit report to find out your credit score and increase your negotiating power



Whether you’re planning an addition for a growing family or getting new storm windows, finding a competent and reliable contractor is the first step to a successful and satisfying home improvement project. It's the first smart purchase you'll make with your new home improvement loan.

Your home is not only your castle, it's an investment. So be cautious when you hire someone to work on it. Home improvement and repair and maintenance contractors often advertise in newspapers, the Yellow Pages, and on the radio and TV. Your best bet is a recommendation from friends, neighbors, or co-workers who have had similar improvement work done. Get written estimates from several firms. Ask for explanations for price variations. Don’t automatically choose the lowest bidder.


Who's Who in Home Improvement Professionals
Depending on the size and complexity of your project, you may need a number of different professionals:


* General Contractors manage all aspects of your project, including hiring and supervising subcontractors, getting building permits, and scheduling inspections. They also work with architects and designers.

* Speciality Contractors install particular products, such as cabinets and bathroom fixtures.

* Architects design homes, additions, and major renovations. If your project includes structural changes, you may want to hire an architect who specializes in home remodeling.

* Designers have expertise in specific areas of the home, such as kitchens and baths.

* Design/Build Contractors provide one-stop service. They see your project through from start to finish. Some firms have architects on staff; others use certified designers.



Don’t Get Nailed
Not all contractors are trustworthy. Here are some tip-offs to potential rip-offs. A less than reputable contractor:


* Solicits door-to-door

* Offers you discounts for finding other customers

* Just happens to have materials left over from a previous job

* Only accepts cash payments

* Asks you to get the required building permits

* Does not list a business number in the local telephone directory

* Tells you your job will be a "demonstration"

* Pressures you for an immediate decision

* Offers exceptionally long guarantees

* Asks you to pay for the entire job up-front

* Suggests that you borrow money from a lender the contractor knows. If you’re not careful, you could lose your home through a home improvement loan scam



Hiring a Contractor
Interview each contractor you’re considering. Ask these questions:


* How long have you been in business? Look for a well-established company and check it out with consumer protection officials. They can tell you if there are unresolved consumer complaints on file. One caveat: No record of complaints against a particular contractor doesn’t necessarily mean no previous consumer problems. It may be that problems exist, but have not yet been reported, or that the contractor is doing business under several different names.

* Are you licensed and registered with the state? While most states license electrical and plumbing contractors, only 36 states have some type of licensing and registration statutes affecting contractors, remodelers, and/or specialty contractors. The licensing can range from simple registration to a detailed qualification process. Also, the licensing requirements in one locality may be different from the requirements in the rest of the state. Check with your local building department or consumer protection agency to find out about licensing requirements in your area. If your state has licensing laws, ask to see the contractor’s license. Make sure it’s current.

* How many projects like mine have you completed in the last year? Ask for a list. This will help you determine how familiar the contractor is with your type of project.

* Will my project require a permit? Most states and localities require permits for building projects, even for simple jobs like decks. A competent contractor will get all the necessary permits before starting work on your project. Be suspicious if the contractor asks you to get the permit(s). It could mean that the contractor is not licensed or registered, as required by your state or locality.

* May I have a list of references? The contractor should be able to give you the names, addresses, and phone numbers of at least three clients who have projects similar to yours. Ask each how long ago the project was completed and if you can see it. Also, tell the contractor that you’d like to visit jobs in progress.

* Will you be using subcontractors on this project? If yes, ask to meet them, and make sure they have current insurance coverage and licenses, if required. Also ask them if they were paid on time by this contractor. A "mechanic’s lien" could be placed on your home if your contractor fails to pay the subcontractors and suppliers on your project. That means the subcontractors and suppliers could go to court to force you to sell your home to satisfy their unpaid bills from your project. Protect yourself by asking the contractor, and every subcontractor and supplier, for a lien release or lien waiver.

* What types of insurance do you carry? Contractors should have personal liability, worker’s compensation, and property damage coverage. Ask for copies of insurance certificates, and make sure they’re current. Avoid doing business with contractors who don’t carry the appropriate insurance. Otherwise, you’ll be held liable for any injuries and damages that occur during the project.




Check References
Talk with some of the remodeler’s former customers. They can help you decide if a particular contractor is right for you. You may want to ask:


* Can I visit your home to see the completed job?

* Were you satisfied with the project? Was it completed on time?

* Did the contractor keep you informed about the status of the project, and any problems along the way?

* Were there unexpected costs? If so, what were they?

* Did workers show up on time? Did they clean up after finishing the job?

* Would you recommend the contractor?

* Would you use the contractor again?

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