For many homeowners, the choice between expanding their current home and buying a new one is difficult. Financing it can be a hassle in this economy. But have you considered the benefits of a surety bond?
In efforts of keeping roots planted, many homeowners eventually decide to renovate their current home to suit spatial needs. Whether the family needs an additional bedroom or simply more space, a home renovation and expansion can be a big project requiring the need for a specialized contractor who can perform and supervise the work properly.
However, with rampant nightmare stories of how homeowners received terrible workmanship or even uncompleted renovations, how do you get assurance from a contractor that the job will be completed and completed properly? A little investment on your part in a surety bond can help assure that your home renovation gets completed as agreed contractually.
A surety bond has three parties: the principal, who is the contractor performing the work; an obligee, who is the receiver of the work; and a surety who ensures all obligations are performed from all parties.
An insurance company can also help filter and screen contractors. They will assess the risk of each one as determined by past performance, financial resources, and access to the appropriate equipment. With this extra help in obtaining the best contractor, you can be more assured that the job will be performed by the best qualified contractor.
Though insurance companies often will provide surety bonds, they are not an insurance policy. An insurance policy transfers risk to the insurance company, who will pay an agreed amount in the case of unforeseen circumstances. A surety bond, however, is quite tangible. The outcome is known, predictable, and controllable. Some insurance companies will even offer surety bonds that provide the obligee with a penal sum, or prescribed dollar amount, if the contract is unfulfilled by the contractor.
It is not always enough to state that you agree with a contractor to build an addition to your home. Be as specific as possible on the outcome. Do you want all work to exceed building codes? Do you want extra waterproofing to assure that the new addition will be leak-free? What type of construction materials do you want incorporated in the addition? The more specific you can be in the contract, the better your surety can serve you when they see that the contract is fulfilled.
Building an addition to your home is a big project. You can help protect your home investment and also help avoid disaster with a good surety bond from a reliable company. Also, visit the SBA surety site for more info.
Use our FHA Guide to find answers to all questions related to FHA loan.