Asked by Dave Kaplan, Chicago, IL • Sat Dec 8, 2012
I'm working on a renovation, the architectural plans are nearly complete. I have contractor that I like and he/we are putting together costs. I already have a mortgage on the house and I'm going to be looking to secure a loan to cover the renovation costs. I imagine that loan would then roll with the current mortgage into some kind of final loan. A home equity loan won't cover cost, it's a big full gut, tear half the house down project.
From what I understand, after talking with a banker I met at Grand Jury Duty (she is awesome and so helpful), that the loan amount will be based on the after completed appraised value of the house. So, as I plan the project with the team I'm aware that I need to be very cost conscious. I can't plan something I can't afford obviously, but how does the appraised value play into the loan with the bank? Can appraisers come back with big differences in value based on what I plan to put into the house?
Any advice or insight would be appreciated, thanks
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