Home Remodeling Loan: These tips can help you avoid home remodeling loan and contractor problems.

Get a home equity loan that pays you, instead of one that directly pays the remodeling contractor. This way you can control the flow of funds to the contractor, and pay as the remodeling progresses. If you get an equity loan that pays the contractor directly, the contractor could disappear before the remodeling work is complete (or even before it gets started).

Before applying for a home equity loan, check your budget to ensure you will be able to afford higher monthly payments if you do not to extend the repayment period. Read all documents before signing, and never sign any documents with unfilled blanks.

To avoid home remodeling scams, do not use the lender recommended by the contractor, and do not let the contractor arrange for financing. As always, shop around for the best deal. Not only shop for the best loan deal, but also for the best contractor. Follow-up the contractor's references, view his previous remodeling jobs, and inquire with your local Better Business Bureau.

Make the contractor put everything into writing to specify who, what, where, when and cost of the remodeling. Make sure the contract 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 is a written authorization to the contractor to make a change or addition to the remodeling job.

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). 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? Ask for a "broom clause." It makes the contractor 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) must give you two copies of a cancellation form (one to keep and one to send back to the company) and a copy 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.

Get the contractor to agree that you will not begin payments until work actually begins, or when materials (windows, doors, lumber, etc) are delivered to the job site. Make payments in stages, according to the percentage of work completed. And get the contractor to agree to receiving the final payment only after the work has been approved by city inspectors, and approved by you.

Do you really need a remodeling contractor? Consult your city building inspector about any special licenses, permits, or building code requirements, and consider your abilities to do the job yourself. Many national hardware stores offer free remodeling classes, including how to install new kitchen cabinets, re-tile floors, install insulation and sheet rock, painting, hanging doors and windows, plus other remodeling lessons. You can still get the cash you need for remodeling by getting a home equity loan.