Every contractor I've spoken to wants payment as 1/3, 1/3, 1/3, which from past experience I know is standard. The mortgage company wants 20, 20, 20, 20, 20...but...they won't release the first 20% until 20% of the work is completed. Do I have to put the first amount down myself in order to get the work done? This could be a real problem!!

We ran into the same problem - but basically told our contractor that this is the way it HAS to be done if he wants the job/money. So far it is working well - the contractor completes a certain pre-determined amount of work, the mortgage company's appraiser evaluates the progress, the contractor gets his money.

In response to your question, most insurance companies will release 20% of funds to "get started" and then in greater portions thereafter. I have not seen anyone turned down for proceeds after an on-sight inspection on any home we were working on. They will usually release funds in three installments. 20%, 55% and 100%.

The problem is is that a lot of preliminary is very costly (electrical, roofing, foundation, plumbing, etc) and it constitutes a small portion of the total job. Once drywall is hung, you usually qualify for 55% payment.

Once the baths are completed, trim work is started and the Kit. cabinets are on the premises, you will usually qualify for the balance of payments.

I cannot speak for all contractors, but we bill in stages for the work that is currently being performed, not a % of the total job. It is a delicate issue though. Most people cannot pay for complete renovations on thier own and contractors are not in the business of financing them either.

You have to talk about what you have, what you will be receiving and what has to be done in what order to get it. We, in general do not mind waiting for some monies, but cannot extend significant "credit" to multiple homeowners at the same time.

I would be glad to discuss this in more detail if you wish.

Thanks,

Steve Drake
Restore-Tech, L.L.C.
985-869-7838