Update kitchen before refi

3 Replies

Hello,

I am hoping someone can give me some insight on this. I want to have the cabinets and countertops replaced in my rental property. I was going to do it on a credit card. Will this effect my refi and will the appraisal effect my refi? Please advise.

Stephanie

Both might have some effect - it really depends on how "close to the edge" you are. If you just barely qualify, you would not want to do this unless you are certain that the remodel will increase the value greater than the debt load. 

If it were me, I wouldn't do a thing until I finished with the loan. If you qualified based on what you have, why add another variable into the mix? 

It all depends for 2 reasons. Increasing your debt on your credit card could cause them to not lend depending on how close to the debt/income ratio you are and if you go over their limit.

But IF the cash you can get out is based on appraisal and not purchase price, increasing the appraised value of the house by rehabbing the kitchen will mean you can pull more cash out.

<not legal advice>