When to Refinance

Should you refinance your home before or after remodeling?

The answer to this question is largely based upon what your goals and intended outcome of refinancing is.  If you need cash out remodel, than you likely will want to pursue refinancing prior to starting any projects in order to have adequate capital to fund renovations.  If you are wanting to merely lower your rate and/or payment, or to change loan terms such as the amortization, than you may want to wait until after remodeling.  Remodeling will likely increase the value of your home.  One of the underwriting considerations on all home loans is the loan-to-value (LTV).  The lower your loan-to-value ratio is, the better loan terms you will be offered.  Therefore, if remodeling is going to enhance your property value you may want to first remodel, get a new appraisal, and then apply for financing.

Another reason you may want to wait to refinance is if you want to take cash out, but do not need the cash to fund the remodeling of your home.  With an increased home value you will have increased equity, allowing you to take out more cash.

There are a lot of variables that would influence what is in a particular homeowners best interest.  A loan representative can help you determine what makes most sense for your personal situation.  We can help match you with a mortgage lender that offers refinance loans in your location.  To have a mortgage lender contact you, request a free consultation.