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Senior Finance Don`t Get Nailed by a Home Improvement!

Mattie H. lived on Social Security in a low-income New York neighborhood. When a contractor visited her and promised to fix her porches, doors, and windows, she signed a blank contract for what she was told was $3,700. In fact the contract was for $37,000. Sky-high interest charges tripled her cost to $119,000- $650 a month for 15 years-payments she could not meet. Having unknowingly put her house up for collateral, Mattie faced foreclosure and homelessness. The New York City Department of Consumer Affairs eventually got the contract rescinded.

Many seniors live in older homes that need repair, or want to renovate to enable them to live independently at home longer, but stories of cost overruns, substandard work, missed deadlines, incomplete jobs, and outright fraud abound. Here are a few tips from the Federal Trade Commission to help you spot the potential rip-offs. Avoid contractors who:

  • Solicit door-to-door, do not list a business number in the local telephone book, or ask you to get the required building permits. Deal only with licensed contractors. Ask friends, relatives, and others you know who have had work done for recommendations.
  • Offer you discounts for finding other customers for a reduced price because they have materials `left over` from a previous job. Ask contractors if there`s a charge for an estimate before allowing them in your home. Get estimates from at least three firms. Ask for explanations of price variations.
  • Accept only cash payments, and/or ask you to pay for the entire job up-front. State laws limit the amount a contractor can request (for example, one third of the total price). Contact your local consumer agency to find out what the contractor may request. Always pay by check or credit card not cash.
  • Suggest that you borrow money from a lender the contractor knows or that you should use your home as security for the loan. If you fail to repay the loan as specified you could lose your home. Have a knowledgeable friend, relative, or attorney review the loan documents and home improvement contract before you sign.
  • Pressure you for an immediate decision. Take your time to compare estimates and check references. You have cancellation rights. Under federal law you have three business days to cancel the deal if you sign the contract in your home. n

Source: `Home Sweet Home Improvement,` October 1998, Federal Trade Commission, for a free copy of this publication call, 1-877-FTC-HELP (1-877-382-4357) or www.ftc.gov

For more information About Home Improvements contact the National Association of Home Builders Remodelers` Council.

For a comprehensive guide to choosing a professional remodeler and managing every phase of your remodeling project order a free copy of How To Find A Professional Remodeler, send a self-addressed stamped envelope to:
NAHB Remodelers Council, Dept. FT, 1201 15th Street, N.W., Washington, DC 20005


This article first appeared in Volume 6, Issue 4 of "The Social Security and Medicare Advisor" newsletter (March/2001).  To receive future editions of "The Advisor" in its special, free e-mail version, please click here.


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