Working with a Home Improvement Lender
There are a variety of lenders that offer home improvement
loans, so you may find it helpful to ask a family member
or friend for a recommendation, particularly if they've
worked with a home improvement lender in the past. You
might also inquire about home improvement loan offerings
at the financial institutions where you have your mortgage
loan, checking account or savings account.
Even before you talk with a lender, it is important
to define the type of renovations you need. If you are
considering a major project, for example, you may want
to find a lender that has experience overseeing work
that is similar in scope. The lender should be familiar
with construction permits, escrow accounts, and procedures
for periodically inspecting a contractor's work.
In addition, the lender should be able to explain the
types of home improvement loans available and provide
guidance on which loan is best suited for your situation.
You may find it helpful to talk to two or three lenders
and compare loan types, interest rates, and fees and
charges before making your decision.
Once you've finalized your construction contract and
closed on your home improvement loan, the contractor
can move ahead with the project. Throughout the renovation
period, expect your lender to monitor construction progress,
oversee any requests for change orders, and disburse
payments in accordance with the terms of your contract
and renovation loan agreement. Payments, or draws, made
to your contractor are often scheduled after 30, 60
and 90 percent of the work is completed.
Before making disbursements to the contractor, the
lender may inspect the property to verify that the work
has been completed. These inspections help to prevent
the contractor from receiving funds before work has
been completed and to ensure that the quality of work
performed is satisfactory. The final payment to the
contractor is not made until the work is completed and
you are satisfied that all contract requirements have
been met.
For information and educational purposes only.
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