Contractors sometimes offer homeowners the opportunity to pay for large projects in installments, especially if it’s a major renovation like an addition to your home.
In this case, you and your contractor would work out an agreement in which you pay for the project as it’s completed.
Use caution here and be sure to read the fine print of your contract, experts advise. Keep an eye out for fluctuating interest rates and hidden fees attached to your payment plan.
Another potential issue when you remodel: a contractor can put a construction lien on your home until you’ve paid for the work in full. Liens are claims against your home. In this case, the contractor can file a claim against your property to protect him or her in the event you don’t foot the bill, which could impede a sale.
“If you’re going to have a lien on your home, then why not just go with a home equity line of credit that will give you more flexibility and potential for tax deductibility,” McBride said.