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First, Dry it Up
If you have a damp or wet basement, you have to fix it before you start any finishing work. The good news is that most water problems can be remedied by two measures: grading the soil to slope away from the foundation and adding or repairing gutters and downspouts. If these steps don't work, you'll have to take more extreme measures like adding exterior drain tile and waterproofing the walls or adding interior drain tile that empties into a sump basket with a pump. Eliminating water problems is time consuming and expensive, but it's critical to prevent a moldy and ruined finished basement.
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Diagnose the Water Problem
Water or moisture in basements comes from two sources. One source is indoor humidity that condenses on cold surfaces, much like water droplets form on a cold drink on a humid day. The other is water—or water vapor—that comes from outside. Rainwater, melting snow or groundwater can saturate the soil around your foundation and leak in. Water can leak through cracks, or it can penetrate porous concrete or masonry walls in the form of water vapor. To figure out what's causing the problem, tape aluminum foil to your basement wall and inspect it a few days later. Moisture on the outside surface of the foil indicates high indoor humidity. Moisture behind the foil means moisture is leaking through the walls. We'll walk you through everything you need to know about how to finish a basement here.