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Planning to refinance and also make some home improvements. If I start with the rennovations, will my home appraise higher?

I am trying to decide between a landscape (including hot tub and back patio) or adding a second story bedroom/office. Is one better than the other in terms of appraisal value? by Vincent_01234 from Denver, Colorado. Mar 20th 2013 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,588 contributions

Your far better off with the 2nd story.. Adding more square footage is the best way to increase your home's value.. The renovation should be completed prior to refinancing and you need to be sure that you get permits.. The appraiser will see that there's an addition, and he will check for a permit.. if there was no permit, then this could be a huge problem... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Mar 20th 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#76 ranked lender in Florida - 2,240 contributions

No question, adding a second story would get you more value! But they have to be completed before you try and refinance.

Mar 20th 2013
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Nancy J Releford (nancyreleford)
#4 ranked lender in Tennessee - 222 contributions

In order to get a higher appraised value, renovations need to be completed.

Mar 20th 2013
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

Interior space will likely give you more value, but both may add something. I recommend asking a local Realtor. If you have enough equity in the property you can simply refinance and pull the money needed out in addition to paying off the current mortgage and any closing or escrow costs you want to include in the new loan, but hte max will be 80-85% of the current value. Or, you will be able to tackle either type of improvement using a conventional renovation loan which will allow the new loan to be up to 95% of the IMPROVED value of the home. There is also a FHA loan option but the hot tub would probably not be allowed and landscaping would depend somewhat on the type of other improvements being done. When you are ready I can help you with the financing, I handle 2-3 of these type loans every month. pdumouchel@primelending.com 843-619-6025

Mar 20th 2013
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

PS. Not all lenders offer renovation loans and others here may not be familiar with the options and restrictions available.

Mar 20th 2013
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Raymond Denton (Raymond)
#12 ranked lender in Ohio - 224 contributions

Adding additional bedrooms and bathrooms usually results in higher value.

Mar 20th 2013
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Jeff Albrecht (jeff.albrecht)
#95 ranked lender in Texas - 76 contributions

Vincent: Phil D from PrimeLending is correct. And one of the first things that we would do, is to make sure that if I were to add a 2nd story that my home (should I ever decide to sell it) "fits" my neighborhood. Consult with a Realtor, and have them prepare a CMA for you. I actually just funded a loan a few weeks ago, and the homeowner added a whole new 2nd story to his home, and nearly doubled his home's size, but he stated that he never wanted to move from this home. After YOU have answered that question, there are a few different ways to go about funding this solution. Finally - have FUN with this experience! Take lots of pics! If you have a better half and kids, and need the room for THEM - involve THEM too in your designs! Phil and I lend in the whole continental US, and we keep bumping in to each other every month. Please call Phil, he commented first, and he will take wonderful care of you Vincent.

Mar 20th 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Additional square footage is your best use of the money. Get your money first, or wait until you are finished.

Mar 20th 2013
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Carlos Figueira (carlosfigueira)
#108 ranked lender in New Jersey - 198 contributions

Adding 2nd story / additional square footage will give you higher value over a patio providing you are not over improving for area. Close on your new refinance before you begin your improvements.

Mar 20th 2013
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Anthony F. Provinzino, MBA (A_Prov)
#93 ranked lender in Illinois - 1 contribution

Vincent, I agree, adding more living space is the best way to increase value and making sure that the addition has a permit trail would be recommended. We are a mortgage brokerage firm doing lending in Colorado. If you have any financing questions please feel free to contact us at anthony@e-financemortgage.com or call at 720-221-7500. We look forward to assisting you.

Mar 21st 2013
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