What do I need from my contractor to apply for a home equity loan?

Just like no two contractors are exactly the same, neither are their contracts or proposals. And at RenoFi, we’ve seen them all. But in order for us to help put you on the best path to a home you love, there are a few submission requirements necessary in every contract and every proposal/detailed estimate from your contractor that you should know.

The Contract

While collecting pay stubs and bank statements is pretty straightforward, this important part of your Home Equity Loan Checklist may be a little less familiar. So to make sure your contract has everything you need right from the get go, ask your GC to include the following:

  • Contact Information: The company name, phone number, website, and email, but also the direct contact info of whoever is managing the renovation. It should always be clear who to call with any questions you have throughout the process.
  • Change Order Procedures: Find out exactly what your contractor constitutes as a change order, and what happens if something out of scope is required during the renovation.
  • Clear Construction Timelines: Not only the projected completion date, but what can be expected daily. What days of the week will the contractor or subcontractors be working? What time will construction start and stop each day?
  • Payment by Progress Breakdown: Request a clear and fair payment breakdown based on the project’s progress. The complexity and size of your renovation can impact this structure, but RenoFi recommends: 1) No more than 15% up front, 2) Ideally, no one payment is more than 20% of the overall budget to ensure there is enough granularity in the payment schedule, and 3) Try to hold back at least 10% for the punch list at the end.
  • Guarantee or Warranty: Your contractor should have a warranty on their work. And it should tell you how long you are covered for, what the contractor agrees to fix if something breaks, and in what timeframe the contractor will return to take care of it.

The Detailed Budget/Project Proposal

The larger the size and scope of your proposed renovation, the higher the level of detail and professionalism the budget/project proposal should include. But here are the standard requirements for most renovation contracts/budget estimates:

  1. Itemized breakdown of all materials: Provided in an organized and legible format. Examples may include:
    • Square footage of the space to be renovated
    • Square footage of each flooring to be installed
    • Linear square footage of roofing to be repaired/replaced
    • Level/Grade of countertops to be installed
    • Brand and specs of the new HVAC unit to be installed
  2. Itemized breakdown of labor: This can be grouped with the breakdown of materials, but should be as detailed as possible. What will you need to supply? Will seeding and grading be included if the landscaping is damaged by certain renovations? Who is obtaining the required permits? Etc.
  3. Architect/Engineer Plans (if applicable): Specifically for more complex renovations, involving multiple rooms or structural/foundation changes; or for any project where the local building code requires engineering/architectural plans be provided. However, RenoFi reserves the right to require plans and specs for review on a case-by-case basis.
  4. Renderings: Although not required for RenoFi’s analysis, any renovation-specific documentation you have available is very helpful to the process.

RenoFi is here to answer any questions you have throughout the application process. Contact us to help make the next step toward your new home as simple as possible.


Other information you may be interested in...

  • 4 Simple Steps to Your Renovation with RenoFi - At RenoFi we break the renovation financing process into 4 simple steps that will walk you through the initial phase of getting your renovation off the ground. Here is what you need to know...
  • Ways to Raise Your Credit Score Quickly - If a low credit score is preventing you from getting approved for a home loan, there are a few things you can do to bring it up pretty quickly. Depending on what items on your credit report are holding you down, these are some of the fastest strategies to boost your score.
  • How Appraisals Work for Home Renovation Loans - "As Completed" Appraisals are conducted for renovation home equity loans and other construction loans. This appraisal process uses the hypothetical condition that the proposed improvements are completed as of the current date of the appraisal.
  • How Do Home Appraisals Really Work? - Ever have a home appraisal come back and show a very different value than you expected? Appraisals are a key part of the mortgage lending process, but it can be confusing to understand how an appraisal assigns a value to your home, or the home you want to purchase. We get you the answers from an expert!
  • Home Equity Loan Requirement Checklist - Realizing that it’s possible to turn your current home into a home you love is a great feeling. Discovering the smartest way to do it through a renovation home equity loan is even better. We'll help you gather everything you need to apply.