Why bids come before the loan
A home equity loan gives you one lump sum at a fixed rate. You can't easily add to it later. If you borrow too little, you may run short in the middle of the job. If you borrow too much, you pay interest on money you don't need.
Firm, written bids give you a real number to borrow against. They also make it easier to compare contractors fairly.
How to collect bids
- Write down what you want done, room by room, before you call anyone.
- Ask two or three contractors to bid on that same list.
- Meet each one at the house so they can see the conditions.
- Ask for bids in writing, with a date and how long the price is good for.
- Ask each contractor who pulls permits and whether inspections are included.
What a good bid includes
- A detailed scope of work.
- Materials, brands and any allowances for items you'll pick later.
- A start date and an estimated finish date.
- A payment schedule tied to finished stages of work.
- Proof of license and insurance, as required where you live.
- Who handles cleanup, debris removal and any warranty.
Comparing bids
The lowest number isn't automatically the best deal. Line up the bids side by side. Look for missing items, low allowances that will grow later, and very different timelines. Ask each contractor about anything that doesn't match. Check reviews and references, and ask to see similar past work.
Red flags
- A large upfront deposit before any work starts.
- A vague scope, like "kitchen remodel" with no details.
- No written contract, or pressure to sign right away.
- Cash-only payment, or no license or insurance when one is required.
- A price far below the other bids with no clear reason.
How much to borrow
Start with the bid you choose. Add a cushion for surprises. Many homeowners plan for 10% to 20%, and more for older homes where walls and floors may hide problems. Add any costs not in the bid, like appliances, permits or a place to stay during the work.
Example: a $60,000 bid with a 15% cushion is $69,000. This is an illustration only.
A CapCenter home equity loan runs from $50,000 to $250,000, with a fixed rate for 15, 20 or 30 years and ZERO Closing Costs (restrictions apply; see Offer details). If your project costs less than the loan minimum, other options may fit better.
Paying the contractor
Once you have the loan, pay as work is finished, following the schedule in your contract. Keep receipts and lien waivers where they're used, so you have a record that subcontractors and suppliers were paid. Hold back the final payment until the work passes inspection and you're satisfied.
