DIYbanter - View Single Post

writes:
Next month I'm going to do a refi. I have just remodeled a room into a
kitchen extension (small eating area where there was none to begin
with) and a closed-in bedroom. I think this has added value to my
place.

I'd like some advice about how to present this if at all to a bank.

Should I show them my receipts for the work done or just before and
after pictures. Should I get the place appraised and just go in with
that or does that even matter because they'll just lend based of value
of surrounding homes anyway??

Any advice about refi under this instance is appreciated.

In many instances, they'll want their own appraisal unless they have
one to re-use that's less than 6 months old. If you're willing to pay
for a full appraisal (where an appraiser enters your home and looks
around) vs a driveby (which looks mostly at comps and verifies your
house is still standing) in order to get the maximum valuation, they'd
likely be happy to consider it.

If you'd like to stack the deck in your favor have a few area realtors
through your home and tell them you may be selling and would like an
assessment of what they think the home would sell for. That way you
at least have something to dicker with to get the appraisal you seek
during refi. But that comes with the big caveat that appraisal
guidelines and what realtors will tell you to woo your listing are
quite different. In the eyes of an appraiser it's not clear whether
the remodeling you've done will change an appraised value or not.

When you apply for the refi, you will be asked what you think the home
is worth as a way to determine the LTV on the refi'd amount. The
appraisal will look to validate that number. Telling the bank you've
done remodelling, etc often isn't appropriate to that discourse. All
they care about is if the estimate property value is in the ballpark
and appraises out because banks are only interested in knowing that
there are no surprises in the amount of risk they're assuming by
lending to a person.

--
Todd H.
http://www.toddh.net/