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Home Repairs to Do Before You Refinance

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Property values have come roaring back. Many can now refinance their loans by virtue of having additional home equity. And increased property values can also put homeowners in a better financial position to sell their home without entering short sale territory. But the fact remains: Everyone wants to attain maximum value for their real estate and home repairs can help.

So what’s the best barometer of a home’s true worth? Simple: the amount a ready, willing and able buyer is willing to pay at any given point in time. Unfortunately, appraisal estimates can be skewed, especially when not all the home repairs and improvements are taken into consideration. This is why you should weigh all home improvement decisions carefully before you commit.

How Do Home Repairs Help?

When You Refinance

Unlike in years past, the weight of an appraisal to determine the home value for the purposes of refinancing a mortgage is based upon the facts (which are primarily based on other homes that have sold) and what the property description is.

Improvements that may help a refinance valuation:

  • Additional bedroom or bathroom
  • Addition to the lot size
  • Addition to the garage
  • Improvement that expands the “use” of the home

When it comes to improvements such as landscaping, painting, any home improvement more “cosmetic” in nature, realize that the primary benefit is for the enjoyment of the property, not for trying to influence value.

When Selling

A home buyer is going to take into consideration all of the facts associated with the property, location, lot size, square footage, bedrooms and bathrooms, as well as additional cosmetic improvements that have been done that add to the look and feel of the home.

Improvements that may help a sale price:

  • New paint job
  • Freshly maintained landscaping
  • Remodeled and/or upgraded interior
  • Deck and/or patio addition
  • Additional bedroom or bathroom
  • Addition to the lot size
  • Addition to the garage

What’s the Biggest Bang for Your Buck?

These include the high-ticket items that increase square footage. An additional bedroom or an additional bathroom increases the square footage, which in turn allows an appraiser to make higher adjustments when determining valuation against other comparable homes around the subject property.


Let’s say you have funds ready for possibly improving your home for long-term enjoyment. Instead of using the funds to make home improvements in an attempt to enjoy your home more, you might actually see a greater benefit if you used that money toward a refinance. Over time, the money you save from refinancing could then be put toward those home improvements down the road.

Selling in the Near Future

Typically, you won’t get a dollar-for-dollar recapture on the home improvement cost, even when selling. Because the weight is given to improvements that expand the use of the house (i.e. bedroom, bathrooms, etc.), it’s more common to expect 20 cents on the dollar, or maybe 30 cents on the dollar, depending on the improvement in such a scenario. Because the market is the strongest indicator of price, the market will dictate sales price followed by additional improvements and subsequent marketing of the home.

Image: Brand X Pictures

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  • Jenny @ Frugal Guru Guide

    This advice is a bit misleading. Each of the major improvements will cost substantially more than the value they bring to the house.

    • ScottSheldonLoans

      Jenny you are correct! 100% no denying it. The chances of Tom’s needed to spend several thousand dollars to replace an entire deck is a bit extreme. An alternative besides bracing the deck, depending on how the home is laid out, would be to get rid of the deck entirely.

  • Pingback: How to Stay on Budget With a Home Renovation | Best Credit Repair()

  • Tom Detweiler

    We were DENIED an approval for a Re-Fi consolidation loan, because VA said we MUST make repairs which come to about $8-10K (mostly a large deck)! And the same appraiser will come out to check the repairs which MUST BE TO CODE. We are out of pocket $450 for an appraiser who essentially allowed the VA to deny our approval for a Wells Fargo Re-Fi!! Between the repairs and another appraisal, we could spend another $10K or more, just to be “allowed” to refinance our own home. BTW our FICO is over 800, the home value is at least $350K, and we owe $88K on the old mortgage and $28K on a HELOC 2nd. So the total is only $116K, considerably less than half the average California mortgage.
    We tried another lender just to see what the difference might be (a lot) and they would do the same thing to us.
    What is going on here??

    • ScottSheldonLoans

      Interesting situation indeed. Ironically, when I bought my home a couple of years ago, I had a deck that was at the end of its economic life. I had a contractor braces for $900, and it looked incredibly ugly, but I got my loan.
      The thing was literally falling apart and was a health and safety hazard which is exactly what the appraiser identified with your deck. The likelihood that you need a whole entire new deck I think is a bit extreme. All you would need to do, most likely is to simply brace it or repair the portion of the deck that is falling apart or that is creating a health and safety hazard. The VA is very particular about health and safety issues on properties as is the FHA. I’m sure you could have the deck fixed or braced, for a very nominal figure which would allow your loan to go through. Granted, it might not look like the most handsome thing in the world, might even be an eyesore, but it will be safe and probably acceptable for the appraiser. You need a better loan officer :-).

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