Owning a house is the American dream. Unfortunately, houses require regular maintenance -- which can turn into a nightmare. Sometimes, it's best to call in a pro.

If you plan to use the services of a dealer or contractor, take care to choose one with a reputation for honesty and good workmanship. There are several ways to check on a contractor:

  • Consult your local Chamber of Commerce, the Better Business Bureau, state attorney general, or local consumer protection agency.

  • Talk with people for whom he has done work.

  • Ask to see samples of his work. Pictures are a help; better yet is to go and get an actual tour of a home that he's worked on.

  • Ask your lender about him, if you plan to finance the project with a loan.

  • Check his place of business to see that he is not a fly-by-night operator.

  • Find out, if you can, how he rates with known building-product distributors and wholesale suppliers.

  • Ask friends and relatives for names of firms that they could recommend.

Compare contractor offers
Before deciding on a contractor, get bids from two or three firms. Make sure that each bid is based on the same specifications and the same grade of materials. If these bids vary widely, find out why.

Many contractors offer package plans that cover the whole transaction. Under such a plan the contractor provides all materials used, takes care of all work involved, and arranges for your loan.

Your contractor can make the loan application for you, but you are the one who must repay the loan, so you should see that the work is done correctly.

Understand what you sign
The contract that both you and the contractor sign should state clearly the type and extent of improvements to be made and the materials to be used. Before you sign, get the contractor to spell out for you in exact terms:

  • How much the entire job will cost you.

  • How much interest you will pay on the loan.

  • How much you will pay in service charges.

  • How many payments you must make to pay off the loan, and how much each of these payments will be.

After the entire job is finished in the manner set forth in your contract, you sign a completion certificate. By signing this paper you certify that you approve of the work and materials, and you authorize the lender to pay the contractor the money you borrowed.

Beware of fraud
Most dealers and contractors conscientiously try to give their customers service equivalent to the full value of their money. Unfortunately, home improvement rackets do exist. Here are a few common sense rules to follow:

  • Never sign a contract with anyone who makes fantastic promises. Reputable dealers are not running giveaway businesses. |

  • Never consolidate existing loans through a home improvement contractor.

  • Never sign a completion certificate until all the work called for in the contract has been completed to your satisfaction. Be careful not to sign a completion certificate along with a sales order.

  • Proceed cautiously when the lender or contractor demands a lien on your property. Most lenders do not require a lien if the loan amount is less than $7,500.

Again, most repairpersons are honest professionals who appreciate the value of a happy customer. They do good work at a fair price. When they make mistakes, it's often just that... a mistake. When this happens, an honest repairperson should guarantee his or her work and correct it.

The best way to avoid getting mired in unpleasant dealings with an unscrupulous contractor is to see the scam coming and to avoid getting involved in the first place. To that end we've laid out 10 contractor-scam warning signs. And for any other home-related tips -- including how to get the best mortgage, equity loan, or refinancing deal -- visit our Home Center.