Understanding your Window Payment Options

Understanding Your Payment Options

You have several payment options for most home improvement and maintenance and repair projects. For example, you can get your own loan or ask the contractor to arrange financing for larger projects. For smaller projects, you may want to pay by check or credit card. Avoid paying cash. Whatever option you choose, be sure you have a reasonable payment schedule and a fair interest rate. Here are some additional tips:

• Try to limit your down payment. Some state laws limit the amount of money a contractor can request as a down payment. Contact your state or local consumer agency to find out what the law is in your area.



• Try to make payments during the project contingent upon completion of a defined amount of work. This way, if the work is not proceeding according to schedule, the payments also are delayed.



• Don’t make the final payment or sign an affidavit of final release until you are satisfied with the work and know that the subcontractors and suppliers have been paid. Lien laws in your state may allow subcontractors and/or suppliers to file a mechanic’s lien against your home to satisfy their unpaid bills. Contact your local consumer agency for an explanation of lien laws where you live.



• Some state or local laws limit the amount by which the final bill can exceed the estimate, unless you have approved the increase. Check with your local consumer agency.



• If you have a problem with merchandise or services that you charged to a credit card, and you have made a good faith effort to work out the problem with the seller, you have the right to with hold from the card issuer payment for the merchandise or services. You can withhold payment up to the amount of credit outstanding for the purchase, plus any finance or related charges.

The “Home Improvement” Loan Scam

A contractor calls or knocks on your door and offers to install a new roof or remodel your kitchen at a price that sounds reasonable. You tell him you’re interested, but can’t afford it. He tells you it’s no problem — he can arrange financing through a lender he knows. You agree to the project, and the contractor begins work. At some point after the contractor begins, you are asked to sign a lot of papers. The papers may be blank or the lender may rush you to sign before you have time to read what you’ve been given to sign. You sign the papers. Later, you realize that the papers you signed are a home equity loan. The interest rate, points and fees seem very high. To make matters worse, the work on your home isn’t done right or hasn’t been completed, and the contractor, who may have been paid by the lender, has little interest in completing the work to your satisfaction.

You can protect yourself from inappropriate lending practices. Here’s how.

Don’t:

• Agree to a home equity loan if you don’t have enough money to make the monthly payments.



• Sign any document you haven’t read or any document that has blank spaces to be filled in after you sign.



• Let anyone pressure you into signing any document.



• Deed your property to anyone. First consult an attorney, a knowledgeable family
  
  member, or someone else you trust.



• Agree to financing through your contractor without shopping around and comparing loan terms.

Getting a Written Contract

Contract requirements vary by state. Even if your state does not require a written agreement, ask for one. A contract spells out the who, what, where, when and cost of your project. The agreement should be clear, concise and complete. Before you sign a contract, make sure it contains:

• The contractor’s name, address, phone, and license number, if required.



• The payment schedule for the contractor, subcontractors and suppliers.



• An estimated start and completion date.



• The contractor’s obligation to obtain all necessary permits.



• How change orders will be handled. A change order — common on most remodeling jobs — is a written authorization to the contractor to make a change or addition to the work described in the original contract. It could affect the project’s cost and schedule. Remodelers often require payment for change orders before work begins.



• A detailed list of all materials including color, model, size, brand name, and product.



• Warranties covering materials and workmanship. The names and addresses of the parties honoring the warranties — contractor, distributor or manufacturer — must be identified. The length of the warranty period and any limitations also should be spelled out.



• What the contractor will and will not do. For example, is site clean-up and trash hauling included in the price? Make sure the contractor is responsible for all clean-up work, including spills and stains.



• Oral promises also should be added to the written contract.



• A written statement of your right to cancel the contract within three business days if you signed it in your home or at a location other than the seller’s permanent place of business. During the sales transaction, the salesperson (contractor) should give you two copies of your contract or receipt. The contract or receipt must be dated, show the name and address of the seller, and explain your right to cancel.

Keeping Records

Keep all paperwork related to your project in one place. This includes copies of the contract, change orders and correspondence with your home improvement professionals. Keep a log or journal of all phone calls, conversations and activities. You also might want to take your own photographs as the job progresses. These records are especially important if you have problems with your project — during or after construction.

Completing the Job: A Checklist

Before you sign off and make the final payment, use this checklist to make sure the job is complete. Check that:

• All work meets the standards spelled out in the contract.



• You have written warranties for materials and workmanship.



• The job site has been cleaned up and cleared of excess materials, tools and equipment.



• You have inspected and approved the completed work.

Where to Complain

If you have a problem with your home improvement project, first try to resolve it with the contrac¬tor. Many disputes can be resolved at this level. Follow any phone conversations with a letter you send by certified mail. Request a return receipt. That’s your proof that the company received your letter. Keep a copy for your files.

If you can’t get satisfaction, consider contacting the following organizations for further information and help:

• State and local consumer protection offices.



• Your state or local Builders Association and/or Remodelors Council.



• Your local Better Business Bureau.



• Action line and consumer reporters. Check with your local newspaper, TV, and radio stations for contacts.



• Local dispute resolution programs.

For More Information

• Federal Trade Commission: www.ftc.gov



• National Association of Home Builders Remodelors™ Council: www.nahb.com