Below is a true story that illustrates why it is so crucial to carefully choose contractors to do work on your home, and NOT to shop solely on price. Shopping solely or even mostly on price is what gets consumers into most of the trouble they get into with services or products.

SPRING 2009: A client contacted me for a $40,000 Home Equity Line Of Credit (HELOC) for renovations to his home. I gave him some advice on how to secure the best HELOC at another bank, as I did not have any good source for them at that time. Below was an update from him a few months later:

"The home equity option did not work for us. And our contractor owes us a significant amount of money on a botched home extension project. While we have some legal recourse, it will still take significant, immediate financial resources for us to complete the unfinished construction project. We are left with no choice but to decrease significant monthly expenditures to obtain the funds needed to complete construction. I want to talk about a 30 Year Fixed Rate refinance, which will save us money since we are now on a 15 Year Fixed Rate on our primary mortgage" Read the rest of this entry »