You've determined that now's the time to tackle that home improvement project and you finally have the money set aside to do so. There's only one thing you're missing: the right contractor for the job. But this is one of the most significant pieces of the puzzle, and if you don't choose wisely, your home and your finances could end up taking a hit.

"Having your home remodeled is one of the most intrusive, intimate things that you'll ever experience," says Paul Winans, chairman of the board for the National Association of the Remodeling Industry. "The contractor and his people will have a more intimate view of your life than even your best friends."

Aside from the privacy factor, you want to make sure the contractor will do a good job on the project you hired him to do and won't rip you off, leaving you with shoddy work and an empty wallet. By taking a few precautions before choosing a contractor you can increase your odds of getting the work done by a seasoned professional, rather than a scam artist.

Once you figure out what you want done, come up with prospective contractors. Even if you like the first one you meet, interview at least three.

The best way to find prospects is by word of mouth -- satisfied customers make the best references. If you don't know anyone who can recommend a contractor, try contacting a trade association such as the National Association of the Remodeling Industry or the National Roofing Contractors Association.

If you're truly stumped, try calling a matching service. These organizations prescreen contractors, so when you contact one of these services and let them know where you live and what you're looking for, they can send you the names of multiple sources that you can then interview yourself.

When prescreening contractors, look for a company that has strict guidelines.

"We require state-required licensing, that they have insurance, and we check to make sure they don't have any significant civil or legal judgments entered against them," says Elaine Schoch, a spokeswoman for the prescreening company ServiceMagic. "Then we also provide past customer ratings and reviews." The service is free for consumers, and since contractors benefit by being referred to customers, they have greater incentive to do a good job.

Narrow your list
The next step is interviewing your prospects.

"You should prepare a list of questions beforehand and put down your concerns," says Winans. "Say, 'I am concerned about this. Tell me why working with you would assure me I will not experience something I'm concerned about.'"

Among other things, you'll need to know how the price will be determined and what products or services won't be included in the estimated price. You'll also want to know who will do the work and what days and times they will be working. The payment schedule should be discussed, and make sure you agree with all of the stipulations.

Your local or state housing authority will be able to tell you what licensing and bonding criteria contractors in your area must meet. If your prospective contractor does not meet them, cross him off the list. You also want to make sure your contractor has workers' compensation and general liability insurance. Call the contractor's insurance company to make sure the coverage is up-to-date. These will protect you if any of the workers get hurt on the job or if they cause damage to your home.