Your home is worth a lot to you ... but dishonest home contractors see the value in it, too. Every year, people spend billions of dollars for home improvements. Usually the work is done well, but each year many homeowners are victims of poor, overpriced, or never-completed work. Some people posing as home repair specialists are simply con artists looking for easy money. Others are "front men" for predatory lenders.

If you are planning on making repairs or improvements to your home, it is important to pick the right contractor and the right financing. Here's how.

Identify what you want done and how much you can afford.

• Write a detailed description of the work you want done, including the quality of materials, brand names and model numbers you want to be used.
• Know how much you can afford to borrow and repay.

Take time to find a reliable home improvement contractor.

• Get recommendations from friends, family and neighbors.
• Check with the State, County and City Government Consumer Protection Offices or Better Business Bureau to see if there are any complaints against the contractor. However, having no complaints filed is no guarantee of reliability.
• Have the contractor prove he is licensed, bonded, and has insurance. Check that information with local government offices.
• Get two or three written estimates that give details about materials, labor charges, and start and finish dates.
• Use the worksheet to help you ask the right questions to compare the bids you get.
• Remember: A clear and detailed contract can protect you if something goes wrong. In general, a contract should spell out who does what, where, when, and for how much.

Don't be pressured to get your financing through a particular company.

• Be cautious of financing offered by the contractor. Dishonest mortgage brokers anc contractors often work together to take advantage of homeowners.
• Get several estimates for the financing, apart from the contractor's estimate.
• Ask a lawyer or housing counselor to explain all the terms of the financing agreement.

Know your legal rights.

• You can cancel the home repair contract by sending a letter within three business days, if the contract was signed in your home or somewhere other than the contractor's permanent place of business.
• You can cancel the financing by sending a letter within three business days, and maybe even later, if your home is used as security for the loan.
• If you think your contractor or lender is fraudulent, notify the police, the local consumer protection agency, your state Attorney General, and state/city office of banking.
• Contact a lawyer. You may be able to sue the contractor or lender using state or federal laws.

Sometimes a home equity loan is a good way to borrow money, but there are some lenders that only bring problems.

Predatory home mortgage lenders look for people who may have financial difficulty. They hunt for people who may be behind on property taxes, who need to fix up their home, or who need money for medical bills. Once they find these people, the lenders often use high pressure sales talk, high interest rates, outrageous fees, and repayment terms that the person can't afford. Fast talkers can trick homeowners into taking out loans that they can't afford to pay back. When they can't make the payments, their homes are at risk of foreclosure.

Even if you don't have financial troubles, no one wants to pay more than is needed. Why pay interest rates higher than you need to? Why pay unneeded fees or charges? Whether you have excellent credit or not-sogood credit, you want the best possible loan you can get.

Don't be fooled by loan offers you see on television or receive in the mail. They don't tell the full story.

Be a smart borrower. Don't get caught in a bad loan!

Sometimes people who have good credit are charged higher rates and fees for loans because they don't know that their credit is good. Getting your credit report and credit score may help you negotiate the best loan for you so you don't pay more than you should have to pay. You'll want to look for any mistakes in your credit report and take steps to correct them. You can get your credit score on the Internet, usually for a fee, or a lender can give you a free copy when you apply for a loan. Avoid lenders who won't give your score to you. Most credit scores range from 300-850, and the higher the score, the better your credit. Most lenders consider scores over 700 as "good" to "excellent" scores.

The three major credit reporting agencies are:

• Equifax: (800) 685-1111, www.equifax.com;
• Experian: (888) 397-3742, www.experian.com; and
• TransUnion: (800) 916-8800, www.transunion.com.

Loan offers may tell you how you can save money by paying off credit cards with a home equity loan, but what they don't say is that your home is at risk if you do it. Yes, sometimes this type of loan is useful, but only if the loan's terms are very good-and you won't run up another credit card bill. Even then, if something should happen and you can't make the home equity payment, your home is at risk of foreclosure.

An important difference: Credit card lenders can't foreclose on your home if you don't pay your credit card bills. But, a home equity lender can foreclose if you don't make the mortgage payment.

Once you've found the loan you want, make sure you get the deal you were promised.

Follow these steps:

• Read the loan papers carefully before you sign.
• Ask a lawyer, housing counselor, or a trusted friend to help you go over the papers.
• Be sure you understand exactly what the lender is offering -and what you're going to have to pay.
• Ask to have all fees explained.
• Ask questions if you don't understand something.
• Take your time. Don't be rushed.
• Be sure that all blank spaces are filled in on all copies before you sign.
• Know your options about credit life insurance. Only buy it if you really need it. Many people don't. If you do want it, shop elsewhere for the best terms. If the lender insists on it, find another lender. Be sure to look for this item on the forms given you at settlement.
• If what you read in the loan is not what you wanted or expected, don't sign the papers! Be prepared to walk out of the settlement (closing) if you find surprises.

Tip:

To Reduce Unwanted Credit Offers call 1-888-567-8688 or 1-800-353-0809 and ask all three credit reporting agencies Equifax, Experian, and TransUnion not to provide information about you to companies wanting to send you loan offers.

You have a legal right to know:

• The total cost of borrowing the money (fees and interest);
• The annual percentage rate (APR);
• The number of payments and the payment amounts;
• How long you have to pay back the loan; and
• The total amount you have borrowed

With home equity loans, you have the right to change your mind, even after you have signed the papers. If you decide within three business days after you sign the papers that you do not want the loan, you have the right to cancel. You can cancel by sending the lender written notice of your decision to cancel by mail, hand delivery, or telegram within three business days. Saturday is a business day. For example, if you sign at 3 PM on Thursday, you have until the end of Monday to cancel. Ask for "return receipt requested" at the post office for proof of when you sent the notice.

If you think that your lender is dishonest-for example, you discover fees that you weren't told about or you were required to buy credit insurance-report it!

• Call your State, County and City Government Consumer Protection Offices: (may be called consumer protection). You can find the phone number in the government listings of the phone book.
• Call your state Attorney General or state office of banking. You can find the phone numbers in the government listings of your phone book.
• Report the problem to the Federal Trade Commission (FTC) at 1-877-FTC-HELP, or at www.ftc.gov.
• Ask a lawyer to look at all of your documents to see if there are state or federal laws that would let you get out of the loan.

Warning Signs

Be cautious if anyone:

• Advertises or says,"Poor credit? No problem!"
• Calls on the phone or comes to your door offering you a "bargain loan."
• Rushes you to sign that day.
• Asks you to pay a fee "up front" to cover a first payment or other expenses.
• Offers you a loan with small monthly payments and a balloon payment that you'll have difficulty paying when it comes due.