Paying for the Work
There are many numbers of financing options to aid you in building your dream remodeling project. Look and see which is going to be best suited to fit your needs.
You can expect your contractor to ask for a partial payment in advance. However, to protect yourself, you should never pay full-price upfront. This will protect you in the even the job doesn’t get completed.
Even with a reputable business and a sound written contract in place, you should not pay in full until: the work is complete, you have inspected it yourself, and find it satisfactory. A partial payment schedule will usually specify what part of the job has been done when a payment is due. Inspect the work and make sure the contractor has met the schedule before you make your payment.
If you are asked to sign a certificate of completion, do not do so until: all the work is completely finished, the site is cleaned up, and you are satisfied.
A Payment and Performance Bond
On larger jobs, you may want to request a payment and performance bond. While there will be an additional charge for the bond, it provides assurance that your project will be completed. A reputable contractor will be bondable for a small additional fee.
Financing a Remodeling Project
If the job is expensive enough that you need to finance it, be sure to shop around for the best terms. This is separate from taking bids on the cost of the work. In choosing your source of financing, you should pay extra attention to the rate of interest, finance charges and the terms of the pay-out.
Some homeowners obtain financing for a remodel, especially when it’s a larger project. There are various financing plans readily available to homeowners; with the most popular being the home equity loan, which bases the loan amount on the equity in the home.
Federal Housing Administration (FHA) loans, specifically for home improvements, are available through many banks and lending institutions. The FHA requires that the contractor be approved by the lender, but proceed with caution...that in and of itself does not guarantee the contractor’s work. Other financing options include personal loans and credit card loans.
A professional remodeling contractor is familiar with the many financing options available and can frequently be of assistance in putting a homeowner in touch with various options, but it’s recommended that borrowers do their own homework on lenders.
For more information about financing a remodeling project, NARI’s Homeowner’s Guide online at www.Remodeltoday.com discusses financing and more in greater depth.
