John Gowrie, Home Buyer in Suffern, NY

I would like to refinance before rates go any higher. How would a "gutted" upper floor affect this process?

Asked by John Gowrie, Suffern, NY Fri Jul 12, 2013

When we purchased our home 11 years ago the upstairs was finished but it was clear the job done wasn't very good. I gutted this recently so we can fix the upstairs up with proper insulation and also add a bathroom. Originally it was a bedroom and a small den. Watching how rates are climbing back up again, I'm concerned how this could impact having our mortgage re-financed. Our current rate is 6.75 which is obviously from before the housing market crash.

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Carmen Di Bi…, Agent, New City, NY
Fri Jul 12, 2013

You say the gutted area was a bedroom and small den. By gutting it you made it uninhabitable and decreased the home's value by one bedroom. From an appraisal standpoint the bedroom is worth 8-10K. While that may not seem like much, the bank views it as the difference between say a 3 bedroom house vs a 4 bedroom house. I would get the sheetrock up as soon as possible so the appraiser can count the bedroom and possibly the bath. Don't forget to get permits and a certificate of occupancy for the bath.

Good Luck,
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George Fergu…, Agent, Monsey, NY
Fri Jul 12, 2013
Even the current increase in interest rates, you could probably save at least 2% if not more, so refinancing would noticeably reduce your current mortgage payment. My son just complete a refinance in the middle of a similar renovation. Start with your current mortgage holder and then shop the various "reputable mortgage providers"; aggressively. My son saved substantial money by negotiating away several "Closing" and processing fees. I am constantly adding new mortgage and home renovations articles to my website . You can also check Mortgage Interest Rates and see all the properties for sale (MLS) in your area. Again, the site is
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allan erps,A…, Agent, Pearl River, NY
Fri Jul 12, 2013
In answer to your questions refinancing is probably a very good idea given the fact of your old mortgage rate. Going forward in order to refinance, as long as the equity in your house is at least 80 percent and your FICO score is good you should have no problem. Best of luck Allan
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Bob Meyerson, Agent, Mamaroneck, NY
Fri Jul 12, 2013
From 20 years in the mortgage business I suggest you make sure you have the proper permits for the work. The appraiser for the bank will see a gutted room but with the permits in hand he should be able to take this into account. It can and will affect the value of the home because you are putting in a new bathroom that was not part of the original purchase of the home.
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