PurdeeGirl
Home Renovations during a Home Appraisal-Can it be done? I am having a home appraisal done in a few weeks, however I am having major work done on my single family home. I am updating a kitchen and a bathroom, among other areas. The reason for the real estate appraisal is I am refinancing my house, no cash out. I am confirming based on your experience it should not be a problem work is being done on the house during the time of the home appraisal? Please advise. Thanks.
Sure
Banks have appraisers to give value to homes in repair, (called rehab loans).
Are you working with a bonded, licensed contractor?
Show the appraiser your building plans,and contract, let him, (or her), talk to your contractor, (if wanted), show you have funds to pay for the contract to be completed.
Shouldn’t be a problem to receive appraisal on updated home value.
What you’re wanting is a rehab loan, without the money to perform the rehab.
Luck
go for it
I am a Mortgage Loan officer in upstate NY, and I know when we order appraisals on refinances, it depends on the extent of the work, and progress, being done. We would use the “as is” value, not the “subject to” value. That means, the value that the house is in now. If you have completely torn down a room, or are building an addition, and you are at the studs, then you may have to finish the work in order to close. If you are in the middle of painting, then that is OK. It depends on how much you are borrowing against how much the value is. If there is a lot of room, the appraiser may just do a drive by and not even come into the home.
You may be able to close and have some funds released to you, while some held back in escrow until the work completed. You will have to consult your mortgage officer for advice. They should have told you this at the time of application.
Good Luck!
~L
With lenders tightening the guidelines out there. As a owner of a large mortgage company it is my belief from 12 yrs of experience you will have problems. Like the other person said, if its a drive by you will be fine, but if it is a full appraisal the lender will require the work to be finished before they distribute any money. Its called a cost to cure…..I would wait till project is done or start the refi now but understand it may be held up while construction is taking place, especially with the amount of work you are doing. Your Loan Officer should be upfront on this issue….Feel free to email with any questions or concerns…..QFM
Well, if the appraiser comes to your house and there is work in progress the appraiser will have two options. One is to value the property “as is” with a “cost to cure” adjustment. So if the estimated value is at 100,000, based upon similar adjusted comprables, and the estimated remaining cost to cure is 5000; the value will be estimated at 95,000. The other way of appraising the home will be to a “subject to” value. This is a prospective valuation of your home as completed. You need to talk to your lender and the appraiser to see which option will work best for your lender since they are party which will be using the appraisal. The lender will decide what action the appraiser will need to take.