No Permit Partially Finished Basement Appraisal

[tommydearest]

About 15 years ago I started a basement finishing project. I wasn't sure if it would qualify as living space and did not want the expense of installing an egress window. So, I completed a room that took up about half the basement. The backside of two walls don't have drywall and studs are exposed with Romex running to switches and outlets.

I had been hesitant to do any refinancing because I didn't want the hassle of an appraisal and running into any problems with code violations. I've perused the forums and seen a lot of info. It doesn't sound like anything would get reported to the building dept.

But, I wanted to come here and get some opinions. I had started the refi in hopes that we wouldn't even need an appraisal. Similar homes in the are are selling for about $160k and we are only financing $85k. We are going through the same company we already hold the mortgage with. I thought this might get us a no appraisal refinance, but our rep told me today that it would be necessary.

At this point, I'm considering just skipping the refi. Should anything in the report throw up red flags to our lender? Anything that would make them investigate further? Am I correct in assuming the appraiser won't check to see if permits were pulled?

I'm hoping everyone is going to tell my I'm worrying WAY too much, but I'd hate to get to some point where I'd have to tear down the room.

Thanks in advance.

 

[Tim The Enchanter]

No exposed uninsulated wires or other hazardous conditions?
If yes I would guess you'll be OK. The basement might not be worth much though.
An appraiser is unlikely to turn you in to the building dept. But they are required to report hazards and what they see in the appraisal.

 

[tommydearest]

No exposed uninsulated wires or other hazardous conditions?
If yes I would guess you'll be OK. The basement might not be worth much though.
An appraiser is unlikely to turn you in to the building dept. But they are required to report hazards and what they see in the appraisal.

No exposed wires or other hazards. This is a conventional, not FHA, in case that matters.

Not really concerned with the basement adding any value. Already have plenty of equity. I'm kind of surprised that an appraisal is even necessary for such low LTV.

 

[Tim The Enchanter]

The lenders have their matrices and decision trees for what loan needs what documents.
Interior or driveby, that call is theirs.
Sounds to me like these concerns should not be an issue for you.

 

[Mark K]

It all depends on the lender.

My daughter in MI just refi'd with her same lender after two years and they didn't need a new appraisal; just lowered the rate from 4 to 2.75, no cash out, 30% equity. However, if your last mtg. was 15 yrs. ago, I'm not surprised they want a new appraisal. You should definitely consider refi is you can drop your rate 1.5 to 2%

 

[tommydearest]

It all depends on the lender.

My daughter in MI just refi'd with her same lender after two years and they didn't need a new appraisal; just lowered the rate from 4 to 2.75, no cash out, 30% equity. However, if your last mtg. was 15 yrs. ago, I'm not surprised they want a new appraisal. You should definitely consider refi is you can drop your rate 1.5 to 2%

What about the whole basement situation? I guess, in addition to the building dept finding out, I'm concerned that the lender may have a problem with what I've done, considering they are the current lienholder too. Am I being ridiculous and worrying way too much?

 

[Tim The Enchanter]

Am I being ridiculous and worrying way too much?

Possibly.

It's a partly finished basement. Big deal.
Is your building dept super aggressive about non permitted work like you have done?

 

[Terrel L. Shields]

This is a conventional, not FHA, in case that matters.

By conventional I assume you mean Fannie Mae/Freddy Mac? I'd be surprised if the appraiser was so thorough as to check permits if you don't mention it. Yes, they might call out any exposed wires or other potential hazards. No one can force you to take out anything. An appraiser who calls for a "cost to cure" needs to justify that. I am not sure it would qualify as anything most appraisers would do in a non-bedroom basement. The basement is unlikely to contribute any significant value to the report, but such unfinished spaces are rarely flagged in my experience. For some loan programs perhaps, but more something FHA might do not so much F/F.

in addition to the building dept finding out

The appraiser rarely communicates with the building department so long as you don't explicitly tell them the area is unpermitted and they go searching for the permit. And then the building permit department might pretty much ignore it even if they knew in that case.

 

[Tim The Enchanter]

The appraiser rarely communicates with the building department so long as you don't explicitly tell them the area is unpermitted and they go searching for the permit.

And now you know what not to do.

 

[tommydearest]

The appraiser rarely communicates with the building department so long as you don't explicitly tell them the area is unpermitted and they go searching for the permit. And then the building permit department might pretty much ignore it even if they knew in that case.

I'm glad you said this. I actually thought it might be better to proactively tell the appraiser it was unpermitted so he wouldn't bother going to search for a permit.