Need advice from a property appraiser

[BigCountry1689]

I am looking to do a Refi to do 2 major projects. I want to put in a new barn for the wife and a front porch on the house for me. The barn will be about $30,000 and the porch about $20,000. I can only borrow 80% LTV so I have to do one project first then Refi again and do the next project as I don't quite have enough equity to pull both off at one time. So my question is which project is going to maximize my money and return me the most LTV. I am asking this more from an appraisal stand point than a resale. I say this because I talked to my realtor that sold us the house and she wasn't much help, she could only tell me comps and what she thought was resale value. But I don't think that is going to be the exact equation the appraiser uses reading through the initial appraisal. I did try to call the company that did the appraisal for purchase but they told me the only thing they could do was a "soft appraisal" and review the plans and provide me with an estimate but that was $400. Also from the appraisal stand point does the porch add to living SQ footage or not. It will be 15ft(D) X 32ft(L), Stamped concrete, Tongue and groove ceiling and rock fascia, with a metal roof essentially an outside living area. Thanks for any input.

 

[kthompson]

Did you check the regulations on a Home Equity Loan? They may go higher than 80% with it.

 

[BigCountry1689]

I had looked at the home equity loan but I was able to get 3.25% on the Refi and I don't remember exact but I think it was somewhere around 5.25% on home equity loan.

 

[BigCountry1689]

Oh and I am also trying to refi out of the PMI I forgot to mention that part.

 

[JMER817]

Neither option is going to give you the bump in home value that you need. Appraisers only give you about $10k for a pole barn regardless of what you have into it. A porch I imagine won't give you much more. All these appraisers do is plug figures in a computer spreadsheet. None of them look at the extras such as concrete, high end Windows, acreage, higher r value insulation, 2x12 vs 2x10 floor joists, plywood vs osb, 9' basement walls vs 8', 0.040" thick siding vs 0.035", 40 year shingles vs 25 year...I could go on. All they look at is number of bedrooms, baths, and sq footage. Can you take a loan out on your 401k if you have one?

 

[BigCountry1689]

Neither option is going to give you the bump in home value that you need. Appraisers only give you about $10k for a pole barn regardless of what you have into it. A porch I imagine won't give you much more. All these appraisers do is plug figures in a computer spreadsheet. None of them look at the extras such as concrete, high end Windows, acreage, higher r value insulation, 2x12 vs 2x10 floor joists, plywood vs osb, 9' basement walls vs 8', 0.040" thick siding vs 0.035", 40 year shingles vs 25 year...I could go on. All they look at is number of bedrooms, baths, and sq footage. Can you take a loan out on your 401k if you have one?

It appeared that way when I was reading the appraisal sheet. I was hoping that the porch would add to living square footage thus adding to value. I have a pension so no borrowing on that. I don't really want to borrow against my 457B that is my emergency scenario. If it becomes a forced issue I can do the home equity but then I would have to refi out later with the hope that the refi will come in at value.

 

[EddieWalker]

Neither option is going to give you the bump in home value that you need. Appraisers only give you about $10k for a pole barn regardless of what you have into it. A porch I imagine won't give you much more. All these appraisers do is plug figures in a computer spreadsheet. None of them look at the extras such as concrete, high end Windows, acreage, higher r value insulation, 2x12 vs 2x10 floor joists, plywood vs osb, 9' basement walls vs 8', 0.040" thick siding vs 0.035", 40 year shingles vs 25 year...I could go on. All they look at is number of bedrooms, baths, and sq footage. Can you take a loan out on your 401k if you have one?

I was thinking that the porch would give you more value to your home then a barn, but after reading this reply, I'm inclined to agree with it. You might want to talk to your loan officer and see what they say about this. Some are very willing to work with you to make a loan happen and come up with ideas you might not have considered.

 

[NorTracNY]

My experience has been very different than JMER. Our town thinks my barn is worth more than I paid to have it build 14 years ago! The porch is next to nothing and doesn't add the the square foot of living space. I believe it would have to be fully enclosed and heated to do that. I'd also NEVER borrow from your 401K. It is better to get a personal loan than do that. There are tax hits and lost investment cost that rarely ever make sense. My tax adviser shakes her head every time one of the clients does it.

 

[Rock knocker]

I want to put in a new barn for the wife and a front porch on the house for me

Not for me to judge your living arrangement, but who's going to live in the house?

 

[BigCountry1689]

My experience has been very different than JMER. Our town thinks my barn is worth more than I paid to have it build 14 years ago! The porch is next to nothing and doesn't add the the square foot of living space. I believe it would have to be fully enclosed and heated to do that. I'd also NEVER borrow from your 401K. It is better to get a personal loan than do that. There are tax hits and lost investment cost that rarely ever make sense. My tax adviser shakes her head every time one of the clients does it.

No that was not an option for me. Don't like playing with my old man money.

 

[BigCountry1689]

Not for me to judge your living arrangement, but who's going to live in the house?

I am assuming your being funny......

In any case the barn is for my wife to have her own space, take care of her horses and any other projects she does. Like what my shop is for me. The porch is more for me because in the early morning and in the evening I like to sit outside as opposed to watching TV.

I spoke to the lender today and his suggestion is a Homepath Reno mortgage as it takes into account the after completion value of the projects. After completion refinancing out and into a conventional to get rid of the PMI. The big kick in the N*ts with this is the combined $12,000 in costs and fees with the two mortgages.

He also said that the barn would probably yield me more in value as the appraiser would have to assign value to that based on structure type and quality. Further that the porch would be assigned based on square footage no matter if it was made out of Italian marble or old pallets. But that neither would yield me any great amount of equity in the short term. I am going to see him at the end of the week to look at the options a little harder and see what we have. thanks for the input thus far.

 

[JMER817]

My experience has been very different than JMER. Our town thinks my barn is worth more than I paid to have it build 14 years ago! The porch is next to nothing and doesn't add the the square foot of living space. I believe it would have to be fully enclosed and heated to do that. I'd also NEVER borrow from your 401K. It is better to get a personal loan than do that. There are tax hits and lost investment cost that rarely ever make sense. My tax adviser shakes her head every time one of the clients does it.

I took a loan out right before the economy took a dump in 08'. While everyone else lost 20-30% I was paying myself back at 4.5%. Plus I wasn't paying the 8% interest to the bank for a loan from them. So it all depends on a lot of variables.

 

[BigCountry1689]

The math is sound but I get nervous messing with retirement. With the way governments are handling pensions right now I only have my 457B as a fall back. Plus in my line of work you don't know when you might get retired early.

 

[LittleBill21]

around here square footage is only added if the room is heated with a permanent heat option. don't forget if you add to your square footage, your insurance and tax may go up.

also appraisals are a joke, a house i bidded on was appraised at 499K i laughed and offered 250k, they laughed back. i walked 6 months later they were begging me for my offer again. it sold for 215k, you need to look around and see what stuff is selling for in the area, that's really the determination.

 

[BigCountry1689]

around here square footage is only added if the room is heated with a permanent heat option. don't forget if you add to your square footage, your insurance and tax may go up.

also appraisals are a joke, a house i bidded on was appraised at 499K i laughed and offered 250k, they laughed back. i walked 6 months later they were begging me for my offer again. it sold for 215k, you need to look around and see what stuff is selling for in the area, that's really the determination.

That was kinda the answer I got today from the lender, as far as tax I live in one of the lowest property tax rate areas, I only pay $800.00/YR for 20 acres and a 2000sq ft house. And insurance this is Florida so I get screwed no matter what on that. Fortunately my house is only 6 years old and built to a 210MPH wind code so I save some. Comps for the area hurt me because it will be 3 miles of house like mine and a mile of mobile homes and so on... And guess what gets foreclosed on more (Not a dig at mobile homes I was raised in one). So while I am confident in my homes value and it having the equity I need I know that if I get the wrong appraiser or their having a bad day then I'm in trouble.

Tomorrow I am going to look into one thing I didn't think of which is my life insurance policy. I have a whole life through work that I have been paying for 14 years and I'm sure there is some sort of value in that not enough for both projects but maybe enough for one. Then I could borrow against it and pay myself back.

 

[MossRoad]

When the economy tanked in '08, the value of our 401K dropped 30%. However, we left our 401k investments alone and kept contributing. They came back to pre-'08 levels in 2 years and doubled in 2 more. Basically, we made 100% interest in 4 years. Had we borrowed against that 401k during that time we would have lost out on SO MUCH INTEREST it isn't funny. Never, ever, never borrow from a 401k if at all possible.

reasons to never borrow from your 401k

 

[MossRoad]

Whole life insurance....
reasons to never get whole life insurance

 

[BigCountry1689]

I pay very little for mine through my employer. Not looking for a public sector debate..... but I get $500,000 for $12.28/mo, for my line of work that is worth it for me to know my wife wont have a mortgage. I will admit that I did not do the research I should of I just signed and accepted when I was hired. But I was reading through tonight while at work and is says there is a cash value over time. Now what that is I don't know, I don't believe in unicorns or free money, but if its there I will use it. I figure for a term policy I will pay slightly less then what I pay for my whole life so its a wash.

 

[RedNeckRacin]

around here square footage is only added if the room is heated with a permanent heat option. don't forget if you add to your square footage, your insurance and tax may go up.

also appraisals are a joke, a house i bidded on was appraised at 499K i laughed and offered 250k, they laughed back. i walked 6 months later they were begging me for my offer again. it sold for 215k, you need to look around and see what stuff is selling for in the area, that's really the determination.

There are houses in my area all the time that come back like that. I have seen houses sit for sale for 2 years before finally getting sold for 50% of original asking price. My neighbor put almost a million dollars into buying 60 acres and converting a barn into a house. He was trying to sell it for 500k. He never did get to sell it. He ended up giving it to his ex-wife after she sold her house because they couldn't sell his.


I just got my property appraised to take out a home equity loan to build my house. They took into account the final building plans and what the house would be worth and I could then borrow 80% of the final value not the current value. I had to submit my floor plans, my cost estimate and my income tax returns but I'm just waiting to sign the paperwork now. I chose to build it myself and sub out some parts of the project that I'm not comfortable with. All in all it should be considerably cheaper than paying a contractor.

 

[Zerk]

No matter what it appraises for, you have to pay the loan.

Sounds like you living beyond your means.