Does my addition count towards my appraisal

[Janelle Mabee]

I refinanced my home back in October and took out a second mortgage to build an addition on our house. The addition has been constructed, but not completed (concrete pad, all framing, roof, windows, heat/AC working, plumbing, etc.). It mainly needs siding and sheetrock.

My question is, we are considering trying to get a home equity loan to manage some of our other outstanding debt, and are unsure if the addition that we've built will have added to our appraisal value yet.

Any help would be appreciated. Thanks!

 

[Bill Baughn]

I refinanced my home back in October and took out a second mortgage to build an addition on our house. The addition has been constructed, but not completed (concrete pad, all framing, roof, windows, heat/AC working, plumbing, etc.). It mainly needs siding and sheetrock.

My question is, we are considering trying to get a home equity loan to manage some of our other outstanding debt, and are unsure if the addition that we've built will have added to our appraisal value yet.

Any help would be appreciated. Thanks!

I would think for the most part the answer is no, at least till it is finished. However, I am sure there are others here who will disagree with me. My next question is "Did you get permits"?

 

[Janelle Mabee]

Yes - I took out all of the permits, and have had all of the inspections required thus far.

 

[ChrisAaron]

We can appraise the property "as-is" or "subject to completion", whichever way your lender wants the report.

If the report is done "as-is", it would seem that while you would get credit for the addition, there would also be a significant adjustment for the estimated amount of work left to do.

If the report is done "subject-to", then you would get full credit for the addition, but you'd have to complete the work prior to closing, generally.

This is something to really discuss with your LO and make sure they are aware of the situation. In my experience, lender's don't want to lend on properties in the middle of a renovation. And it's easy to understand why.

I would do whatever it takes to finish the addition first. It will be mush less hassle.

 

[Janelle Mabee]

I appreciate the advice...

The lender is aware of the status of the addition, and apparently the underwriters said that the addition wouldn't count, but the appraisers consulted through the lender said it would. That's why I came here to try and get some different opinions. Thanks again!

 

[Janelle Mabee]

Does anyone else have any input? I don't know if it matters or not, but the addition adds approx. 1500 square feet to my home...any other advice is appreciated!

 

[JTip]

I refinanced my home back in October and took out a second mortgage to build an addition on our house.

I agree with the other posts. Complete the addition to your home and then go from there. It really isn't worth much until its complete.

ST

 

[Joanne Rauenzahn]

For where I work it would depend on when the work on the addition would be completed. If there are new funds being taken out to finish it and they were being escrowed so we, the lender, had control over making sure the work would be done - we could have it appraised subject to the completion of the addition, thus using the full value. Not all lenders will handle that *construction* end of it tho. That would be the only way we would do it Hope that helps!

 

[Janelle Mabee]

Is there anyone on here familiar with real estate in the Metro Nashville area? The reason I ask is that from my understanding this is a large growth area, and appreciation is fairly high. Is it possible that from 10/2005 to 06/2006 there would have been a significant appreciation to the property (without the consideration of the addition), thus possibly allowing me to take out more equity? Thanks!

 

[Joy Baker]

I recently got a home equity loan from Wachovia. They did not require an appraisal (I think they did an AVM). They may have sent someone out to take a front photo. If interested I can give you my Wachovia contact person.
Joy Baker