Fortify yourself for home improvement

As you assess those home improvement projects you'd like to launch in the springtime, here are some tips to consider.

Most home improvement loans are secured by a mortgage on your home. It's better not to finance expensive credit insurance or to consolidate other debts into this loan. Your home will be at risk for every extra dollar you borrow. If you don't make your payments, you could lose your home.

• Plan ahead. Know what you want or need to have done before contacting a contractor.
• Ask family and friends for recommendations.
• Get at least three written estimates from contractors who have come to your home to evaluate what needs to be done. Be sure the estimates are based on the same work so that you can make meaningful comparisons.
• Contact your local or state consumer agency and Better Business Bureau for information on contractors' licensing or registration requirements and complaint records. Some states require licensees to pass tests for competency and scrutinize licensees for financial solvency. Some states also have a fund to cover some financial losses that result from problems with licensed contractors.
• Get references and talk to people for whom the contractor has done similar work.
• Get the names of suppliers and ask if the contractor makes timely payments.
• Contact your local building inspection department to check for permit and inspection requirements. Be wary if the contractor asks you to get the permit. It could mean the firm is not licensed.
• Be sure your contractor has the required personal liability, property damage and worker's compensation insurance for workers and subcontractors. Check with your insurance company to find out if you are covered for any injury or damage that might occur.
• Insist on a complete written contract. Know exactly what work will be done, the quality of materials that will be used, warranties, timetables, the names of any subcontractors, the total price of the job and the schedule of payments.
• You have cancellation rights in home improvement contracts. Cancellation rights entitle you to get out of the contract without penalty—usually within three business days—although you may be liable for any benefit received. You may be covered under state and federal laws.
• Understand your payment options. Compare the cost of getting your own loan vs. contractor financing.
• Try to limit your down payment. Find out if your state's laws specify that only a certain percentage of the total cost may be made as a down payment.
• Don't make final payment or sign an affidavit of final release until you are satisfied with the work and know that subcontractors and suppliers have been paid. State lien laws may allow unpaid subcontractors and/or unpaid suppliers to attach your home.
• Check to see if state or local laws limit the amount by which the final bill can exceed the estimate, unless you have approved the increase.
• Pay by credit card when you can. Under federal and state law, in most cases, you have the right to assert any claims or defenses you have against the seller of the goods or services against the credit card company. This generally means that if the goods or services are defective, you can refuse to pay the credit card company until the problem is corrected.

• Be especially cautious if the contractor:

- Comes door-to-door or seeks you out.

- Just happens to have materials left over from a recent job.

- Tells you your job will be a "demonstration."

- Offers you discounts for finding him/her other customers.

- Quotes a price that's out of line with other estimates.

- Pressures you for an immediate decision.

- Offers exceptionally long guarantees.

- Can only be reached by leaving messages with an answering service.

- Drives an unmarked van or has out-of-state plates on his/her vehicle.

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

Zall, Bureaucratus columnist and a retired federal employee, is a freelance writer based in Silver Spring, Md. He specializes in taxes, investing, business and government workplace issues. He is a certified internal auditor and a registered investment adviser. He can be reached at miltzall@starpower.net.