Remodeling and Home Design

Interviewing a Remodeler

What Questions Should You Ask?

Who will you choose to wield the hammer on your particular job? That isn't an easy question. Your choice of a remodeling contractor will ultimately determine the success and enjoyment of your investment.

You can increase your chances of having a successful project by conducting qualifying interviews, following up on references and credentials, and considering all aspects of the remodeling project. You need to look for the professional you feel will provide the best all-around service available above and beyond the necessary construction skills.

The following questions will help you establish a company's qualifications and reputation, and help you find the right person for your job.

How long have you been in business? Look for a company with an established business history in your community. Surviving in any business in today's competitive marketplace is a difficult task. Most successful contractors are proud of their history in the industry.

Who will be assigned as project supervisor for the job? Also ask whom you should contact if the supervisor is not available. Get exact names and contact phone numbers for all persons who will be involved in the project.

What is the time frame for starting the project? Now is the time to ask questions about work schedules. You should ask: What is your estimate for completion? How early will your crew normally begin work? When will they normally quit for the day? Will I be contacted about delays or changes in the schedule? By whom?

What is your approach to a project of this scope? This will give you an idea of how the contractor works and what to expect during the project. Listen carefully to the answer. This is one of the big indicators of the company's work ethic.

How do you operate? In other words, how is your firm organized? Do you have employees or do you hire subcontractors? If you do have employees, what are their job descriptions? Do you use a project supervisor or lead carpenter to oversee the project? Other firms will have additional positions. You should know what parts of your project will be handled by staff, and which will be contracted out to independent contractors.

Is your company a full service or specialty firm? If you are planning a small project, say replacing the bathroom plumbing, you may be better off hiring a specialty plumbing firm or a bathroom remodeler. However, if your project involves multiple changes, entire rooms or additions, you should consult a full service or design-build firm.

Do you have design services available? If you are considering a large or involved project, you will need design services. If the contractor does not have design-build capabilities, you should consider hiring an architect. Depending on the size and scope of the project, you may need an architect or structural engineer.

Does your company carry workers compensation and liability insurance? Ask for copies of the insurance certificates to verify coverage. In addition, some states require licensing and registration. If your state or city does have construction licensing laws, ask for your contractor's registration and license, then confirm the license number and expiration date with your local jurisdiction.

Are any of your company's employees certified? Trade certifications are good indicators of dedication, professionalism and knowledge of the industry. Remodelers are required to meet certain industry criteria to maintain their certifications. NARI offers six designations: Certified Remodeler (CR), Certified Remodeler Specialist (CRS), Certified Remodeler Associate (CRA), Certified Kitchen & Bath Remodeler (CKBR), Green Certified Professional (GCP), Certified Lead Carpenter (CLC), and Certified Remodeling Carpenter (CRC).

May I have a list of references for projects you have completed which are similar to mine? The contractor should be able to supply you with a minimum of three references, including names, telephone numbers and addresses. As a follow up to this question, ask how long ago the project was completed and if the contractor can arrange a visit to see the finished job. You should also ask for professional references from suppliers, financial institutions, or subcontractors to verify sound business practices.

What percentage of your business is repeat or referral business? This will give you a good indication about the company's customer satisfaction. According to research conducted by NARI, most remodeling businesses attribute over 50 percent of their annual volume to customer referrals; some even claim up to 90 percent or more of their total annual sales.

How many projects like mine have you completed in the past 12 months? This will help you determine the contractor's familiarity with your type of project. You should confirm that a good portion of those completed projects were similar to the type of project you are proposing.

Will we need a permit for this project? Most cities and towns require permits for building projects. Failure to obtain the necessary permits or to arrange obligatory inspections can be illegal. In some cases, if a project violates a zoning law or some other regulations, it may even have to be demolished if there is no way to comply with the law. A qualified remodeling contractor will be conscious of the permit process, and ensure that all permits have been obtained before initiating any work.

May I have a list of your suppliers? You may want to add calling the contractor's suppliers to your list of follow up actions. This will help protect you from mechanics liens for nonpayment by the contractor. Suppliers also can be a source to establish credit history for the company.

Of the many questions you can ask during an interview, the most important question is one you must ask yourself: "Do I feel comfortable with and trust the person I am about to hire?" Your answer to that question should make the hiring decision a little easier.

Information provided by www.nari.org.

Money-the one thing that causes more disagreements and stress than just about any other entity. Luckily, creating a budget for your home improvement project does not need to be intimidating or cause World War III in your living room. Just take this simple crash course in everything you need to know about remodeling finance:

How Much Can You Afford?

This question alone is enough to strike fear into anyone's heart. The truth is not many people enjoy establishing a remodeling budget-and many just don't. Many homeowners prefer to call a remodeling contractor and expect him or her to create the budget for them, which is not the best way to begin. How do you start off right? You can begin by taking these four easy steps in the right direction:

Step One: Decide how long you plan on staying in your home. The length of time you intend to stay in a home will affect how much money you should invest in it. If you are going to stay in the home for more than ten years, you should spend as much as you are able to create the home of your dreams. However, if you are planning on moving in the near future, you should take care not to over-build for your neighborhood. Look into the real estate comparisons for your area and keep your investment in line with the average home sales price. You don't want to invest thousands of dollars you won't be able to recoup at closing.

Step Two: Make a list of all your debts. You should include any debts you pay on a monthly basis, such as mortgages, car loans, credit cards, and any other items with a fixed monthly payment. This list should not include payments for groceries, utilities, telephone services, or other general expenses. Call this list your monthly expenses.

Step Three: Determine your total gross monthly income. Include all sources of income that you would list on a loan application.

Step Four: Complete the following worksheet to determine how much you can afford to pay for your remodeling project on a monthly basis. These formulas are used when the remodeling project is going to be financed. Warning: Cash is not always the best option!

Calculations 101

Step 1 - DTI

Lenders use a simple Debt-to-Income (DTI) ratio to determine if a homeowner can afford the additional debt of a remodeling project.

DTI

Enter Your Total Monthly Expenses $                     

Add the Estimated Monthly Payment for the Remodeling

Project + $                     

Total = $                     

Divide the Total by Your Gross Monthly Income... $                     

DTI % =                     

Each lender will approve loans at a specific DTI percentage (most lenders will tell you what their set DTI ratio is, if you ask). For example, if the lender accepts DTI ratios of 45 percent and your DTI ratio is 30 percent, your loan would be approved. However, if your DTI ratio is 55 percent, you would need to find other financing options. Perhaps your lender offers debt consolidation loans that could reduce your DTI ratio, which brings us to the next step:

Step 2 - The Maximum Payment

The next step is to determine the maximum monthly payment you can afford for remodeling. Multiply your monthly gross income amount by the lender's maximum DTI allowance, and subtract your current total monthly expenses, excluding the estimated remodeling payment.

Gross Monthly Income $                     

Lender's DTI ratio x                     

Subtotal = $                     

Total Monthly Expenses - $                     

Maximum Affordable Payment = $                     

If the last line is negative, you will not be able to borrow from that lender. See step 3 for further options.

STEP 3 - Consolidation

If your DTI ratio was above the lender's accepted percentage, or if your maximum affordable payment was too low, you may want to consider a debt consolidation loan. This would incorporate your current debts into the home improvement loan. Not only does this allow you to roll your debts into what may be a tax deductible loan, it also provides one easy payment for your debts and lowers your DTI percentage. In addition, the interest rate on a debt consolidation loan may be lower, which will save you additional money.

- See more at: http://www.nari.org/homeowners/news/article.asp?SECTION_ID=1&ARTICLE_ID=5&F_CATEGORY_ID=11#sthash.1katoxzf.dpuf
Budgets 101

Saturday, April 28, 2007



Money-the one thing that causes more disagreements and stress than just about any other entity. Luckily, creating a budget for your home improvement project does not need to be intimidating or cause World War III in your living room. Just take this simple crash course in everything you need to know about remodeling finance:

How Much Can You Afford?

This question alone is enough to strike fear into anyone's heart. The truth is not many people enjoy establishing a remodeling budget-and many just don't. Many homeowners prefer to call a remodeling contractor and expect him or her to create the budget for them, which is not the best way to begin. How do you start off right? You can begin by taking these four easy steps in the right direction:

Step One: Decide how long you plan on staying in your home. The length of time you intend to stay in a home will affect how much money you should invest in it. If you are going to stay in the home for more than ten years, you should spend as much as you are able to create the home of your dreams. However, if you are planning on moving in the near future, you should take care not to over-build for your neighborhood. Look into the real estate comparisons for your area and keep your investment in line with the average home sales price. You don't want to invest thousands of dollars you won't be able to recoup at closing.

Step Two: Make a list of all your debts. You should include any debts you pay on a monthly basis, such as mortgages, car loans, credit cards, and any other items with a fixed monthly payment. This list should not include payments for groceries, utilities, telephone services, or other general expenses. Call this list your monthly expenses.

Step Three: Determine your total gross monthly income. Include all sources of income that you would list on a loan application.

Step Four: Complete the following worksheet to determine how much you can afford to pay for your remodeling project on a monthly basis. These formulas are used when the remodeling project is going to be financed. Warning: Cash is not always the best option!

Calculations 101

Step 1 - DTI

Lenders use a simple Debt-to-Income (DTI) ratio to determine if a homeowner can afford the additional debt of a remodeling project.

DTI

Enter Your Total Monthly Expenses $                     

Add the Estimated Monthly Payment for the Remodeling

Project + $                     

Total = $                     

Divide the Total by Your Gross Monthly Income... $                     

DTI % =                     

Each lender will approve loans at a specific DTI percentage (most lenders will tell you what their set DTI ratio is, if you ask). For example, if the lender accepts DTI ratios of 45 percent and your DTI ratio is 30 percent, your loan would be approved. However, if your DTI ratio is 55 percent, you would need to find other financing options. Perhaps your lender offers debt consolidation loans that could reduce your DTI ratio, which brings us to the next step:

Step 2 - The Maximum Payment

The next step is to determine the maximum monthly payment you can afford for remodeling. Multiply your monthly gross income amount by the lender's maximum DTI allowance, and subtract your current total monthly expenses, excluding the estimated remodeling payment.

Gross Monthly Income $                     

Lender's DTI ratio x                     

Subtotal = $                     

Total Monthly Expenses - $                     

Maximum Affordable Payment = $                     

If the last line is negative, you will not be able to borrow from that lender. See step 3 for further options.

STEP 3 - Consolidation

If your DTI ratio was above the lender's accepted percentage, or if your maximum affordable payment was too low, you may want to consider a debt consolidation loan. This would incorporate your current debts into the home improvement loan. Not only does this allow you to roll your debts into what may be a tax deductible loan, it also provides one easy payment for your debts and lowers your DTI percentage. In addition, the interest rate on a debt consolidation loan may be lower, which will save you additional money.

- See more at: http://www.nari.org/homeowners/news/article.asp?SECTION_ID=1&ARTICLE_ID=5&F_CATEGORY_ID=11#sthash.1katoxzf.dpuf
To help consumers through the process, NARI's website at www.RemodelToday.com offers many tips under the "Home Owners" section and also offers a search engine to help locate a contractor or chapter in your area.  NARI also offers a free brochure, "How to Select a Remodeling Professional," to consumers who call (402) 331-1718 or complete the feedback form on the last page of this website.

The National Association of the Remodeling Industry (NARI) is the only trade association dedicated solely to the remodeling industry.  With more than 5800 members nationwide, the Association -- based in Des Plaines, Illinois,  -- is "The Voice of the Remodeling Industry"TM.  For membership information, contact the local NARI office at (402) 331-1718.
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