We all dream of creating a perfect castle from our homes. If you are ready to take the plunge and hire a contractor, there are a few things that you should know before the hammer starts swinging. A clear-cut contract is your first step to creating your dream home.

Home improvements are big business, now more than ever before. Some jobs are relatively minor, like a new kitchen floor or a landscaping job. On the other hand, swimming pool installations and entire kitchen renovations require more time, skill, material and money. Whether your home improvement job is big or small, if you need to hire a professional, then you also need a solid home improvement contract.

What do you need to know before signing the dotted line?

Shop Around

Don't be too quick to sign a contract with the first home improvement professional you meet. Speak with people you know and trust, and ask for referrals. Compile a list of contractor names along with their professional license numbers. This information is essential for performing background checks through services like the Better Business Bureau and local state or provincial Consumer Affairs' business licensing divisions.

Be sure that the names match the numbers, and check for any complaints that may have been filed against the contractors. You need to be as thorough as you would when checking references for a potential employee.

List Your Terms

Once you've established all of the required background information and chosen your contractor, it's time to sign a home improvement contract. According to experts, there is a long list of concise information that you should look for in a written home improvement contract.

First and foremost, be sure that the full information of the contractor or company, including the professional license number, is clearly shown on the contract. Every detail of the project must also be in place, including start and finish dates and concise financial details including labor fees, material costs and payment arrangements.

A "right to cancel" clause is an important point to look for in your contract. This gives you the opportunity to change your mind about the contract after you've signed it. You should have no less than three days' grace, during which time you are free to cancel. You should also be protected, by means of your contract, should you come up against unforeseen circumstances that prevent completion of the project.

Be sure to list the small items on your contract as well. Don't overlook the simple fact that contractors working on your property will need to use certain facilities. If you're not comfortable with them using your washroom and telephone, spell it out in your contract. The building contractor will need time to make alternate arrangements.

Watch Your Assets

You must keep a copy of the home improvement contract, signed by you and the contractor. Keep this document filed in a safe place, even after the project has been completed. Any guarantees should be clearly shown on the contract, so you will have legal backing if there is a problem with the materials or workmanship. Don't pay more than the minimum guaranteed down payment, and never pay the remainder of the agreed price until the project has been completely finished and all of the debris has been cleared away.

As a homeowner, it's your responsibility to protect both your property, and your own best interests. If your home improvement contract is not completely filled in, don't sign it. Read the contract in its entirety and don't be afraid to ask questions if any of the terms confuse you. The home improvement contract should provide all of the protection you need. After all, your home is your castle.

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Contributor Alastair Lydeard is a columnist for several web magazines, on my family and home garden themes.