If you have developed a good working relationship with your contractor and you have a clear and solid contract that specifies the amounts and dates payments are due for parts of the work in your remodel or addition, don’t pay a deposit to the contractor. Develop a good-faith working relationship and pay each part of the cost on time. Particularly if you are purchasing the materials, there is nothing coming out of the contractor’s pocket in advance. The contractor will probably put a mechanic’s lien on your house during construction to ensure payment. This covers the contractor. Leave your money in the bank to draw interest as long as possible.

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