Financing Your Remodeling Project
There are various financing options available to homeowners. Among the most popular is the equity line of credit that bases the loan amount on the equity in your home. The Federal Housing Administration (FHA) has loans specifically for home improvements. They are available through many banks and lending institutions. FHA, however, requires the lender to approve the contractor. FHA does not guarantee the remodeling contractors’ work. Some institutions will allow you to borrow against the anticipated equity in your home once your improvement project is complete. A professional remodeling contractor is familiar with financing options available and can help. Research various sources of funding to compare individual qualification guidelines, interest rates, terms and tax considerations.

Think About Design and Function
Design and function should be foremost in your mind if you’re thinking about adding a room or converting an existing room. When planning a larger, more complicated project, give thought to details, such as intended use of the space, flow of the space, where you want electrical outlets, telephone jacks and cable hook-ups located, the type of lighting required, your current and future storage needs and whether you want to include luxury items. These details will enable your home improvement to better suit your needs and your lifestyle. A professional remodeling contractor or design service should be consulted about design and function of any remodeling project. He or she also can help you with time- and money-saving hints.

Comply With Local Codes and Permits
Most cities, towns and counties have established building codes, but they vary considerably from one jurisdiction to another. A building permit generally is required whenever structural work is involved or when the basic living area or footprint of the home is to be changed. Ask your real estate agent or your insurance agent about the local requirements in your area. Also, if you live in a deed-restricted community, be sure to review your copy of the homeowners agreement. Under some agreements, it’s your responsibility to notify your homeowners association if you intend to make any home improvements. This may include getting the plans approved by a design committee.

Before any remodeling work can begin, there must be a complete contract. This holds the job together and ensures that all parties involved agree to the same vision and scope for the project. According to NARI, here are some key areas you should look for in a contract:
  • Be sure the contract includes the contractor’s name, address, phone and license number.
  • Detail what the contractor will and will not do.
  • Your contractor should detail a list of materials for the project in your contract. This includes size, color, model, brand name and product.
  • The contract should include the approximate start date and substantial completion dates.
  • Study all required plans carefully. Insist that you approve them and that they are identified in your written contract before any work begins.
  • Federal law requires a contractor to give you written notice of your right to, without penalty, cancel a contract within three business days of signing it. This is provided that it was solicited at some place other than the contractor’s place of business or an appropriate trade premises such as your home.
  • Make sure financial terms are understood and spelled out in the contract. The total price, payment schedule and any cancellation penalty should be clear.
  • A warranty covering materials and workmanship for a minimum of one year should be written into the contract. The warranty must be identified as either “full” or “limited.” The name and address of the party that will honor the warranty (e.g., contractor, distributor or manufacturer) must be identified. Make sure the time period for the warranty is specified. (See more on warranties below.)
  • A binding arbitration clause is also a good inclusion in the event a disagreement occurs. Arbitration may enable you to resolve disputes without costly litigation.
  • Thoroughly review the entire contract and be certain you understand it before signing it.
  • Consider the scope of the project and make sure all items you’ve requested are included. If you do not see a specific item in the contract, consider it not included. Never sign an incomplete contract. Always keep a copy of the final document for your records.
  • Consider having a legal professional review the contract before it is signed.

things to KEEP IN MIND
California residents are reminded of the following on contractor selection from the California Department of Consumer Affairs (
  • The Contractors State License Board ( protects consumers by regulating the construction industry through policies that promote the health, safety and general welfare of the public in matters relating to construction. The agency is responsible for issuing licenses, conducting inspections, investigating complaints, assessing penalties, setting rules and standards and holding hearings.
  • Verify any claims the contractor makes about energy savings or increased security, home value or other added advantages to the improvements you are buying.

Most home repair and remodeling work is performed under contract. Legitimate businesses usually will insist on having a contract for their own protection, and a well-written contract should protect the homeowner as well. Frequently, consumers contact the California Attorney General’s office complaining of unreasonable, even outrageous terms of business. Too often, consumers have signed a contract they have not read, placing them at a disadvantage. The following precautions are important to remember whenever you sign a contract of any kind.
  • Do not allow anyone to rush you into signing a contract. The sales person should be willing to leave the contract with you so you can read it carefully on your own time. If anyone rushes you or tries to make you sign on the spot or will not leave a copy for you to study, you should be suspicious of that person and the contract.
  • Make sure everything promised to you is in the written contract. Insist on a written contract that specifically states what the contractor will do, when the work will start and when it will be completed.
  • Make sure the contract includes everything the salesperson or contractor promised and spells out the cost of special orders and materials.
  • Be aware that most contractors will not allow you to change your mind for free about what you want done or how you want it done. Often a contractor will require a service charge for changing the work order, and this should be covered in the contract.
  • Get and keep copies of everything you sign at the time you sign it.

What the Law Says
Any contract you sign for work on your homestead must contain the following warning next to the space for your signature: “Important Notice: You and your contractor are responsible for meeting the terms and conditions of this contract. If you sign this contract and you fail to meet the terms and conditions of this contract, you may lose your legal ownership rights in your home. Know your rights and duties under the law.”

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