Getting an appraisal while remodeling

[robert matthews]

Almost done with a remodel, but need to refi to finish and lender would probably need an appraisal. How with that work, while the appraisal is still going on? Does it matter if final inspection is done or not? And how about the degree of remodel....i.e open walls vs. just paint and fixtures left, etc. Would an appraiser do an appraisal, and just reduce the value for the remaining cost? Or can an appraisal be done at all. Ideas, experiences, etc. greatly appreciated.

 

[Bill_FL]

Well, in short, the answer is yes.

An appraisal could be done for any of those scenarios. The question left is one of finances. What do you owe, how much do you need and what is the loan to value ratio your bank is willing to lend? This will be an in-house loan for them until the work is done, so they can do it.

If you are down to bare studs, unless you owe practically nothing, that is probably not your best choice. Most like to have the appraisal done "subject to completion" of the work. You will meet withthe appraiser, document the work to be done, then the appraiser provides the bank with an opinion of value, as if it were done. The bank slowly allows you access to the money, depending on how much, and has the appraiser go back out and give status updates on your work (unless its minot remodel). Works much like a new construction loan.

Before you get the last bit of money, the appraiser goes out and then lets the bank know the house is complete.

 

[Fred]

Robert,
This issue has been debated a lot on this forum. Many appraisers are unsure of how to find the as-is value of incomplete properties (which can be complicated to estiate) and will give the after-completed value (which is relatively easy to estimate) no matter is needed.

Make sure you know what you need and make sure those you contract with are on the same page.

 

[Pamela Crowley (Florida)]

I hear that IndyMac Bank has loan programs for properties like yours.

Just don't get involved with any mortgage broker that wants to hide the facts from the lender. That would be called 'mortgage fraud' and any loan officer that suggests this should be run away from.

 

[Mr Rex]

Robert, most lenders, unless its a local bank that is going to keep your loan in house, will most likely not treat this as a typical mortgage due to the unfinished work. As such, you will probably need to get a "rehab loan" or a "construction to perm" or other similar alternative product that is set up for situations just like yours. There are many out there, including some that allow you to lock the rate now and have a single closing to help keep the costs down. Just be sure that the lender you are dealing with knows that the home is in some phase of construction and they (or some other lender) can fit this round peg into the round loan program, rather than trying to pound it into a square one via smoke and mirrors by the appraiser and/or loan officer. Good luck.