If you are planning on financing your home improvement or home repair project, there are several things to keep in mind.
- Don’t agree to a home equity loan if you don’t have enough money to make the monthly payments.
- Don’t agree to financing through your contractor without shopping around and comparing loan terms. “Sign on the Dotted Line” Scam artists can also victimize consumers with special financing offers for home improvement repairs. In this type of scam, a contractor will offer to remodel a kitchen or fix your roof for a reasonable price. Since you haven’t budgeted for it, he tells you he can arrange financing through a lender. Later you realize you have signed a high interest home equity loan. The contractor has already been paid by the lender and has no reason to complete the work to your satisfaction.
- Never borrow money from a lender the contractor recommends. Do your research, talk to at least three lenders, compare financing proposals and choose the one you are most comfortable with—also check them out with the Better Business Bureau before you enter into a financial arrangement with them.
To insure materials and supplies are always paid for in full, you should ask the contractor what material suppliers he will be using. Then request the supply/material invoices so you can pay the suppliers directly yourself instead of paying the contractor.
Don’t forget: an unpaid supplier can put a lien on your property. Be 100% sure all the supply bills are paid by handling the transaction yourself.