Should I remodel before refinancing?

Question

I bought a condo (townhome style) here in Bothell, WA in March2020. I only paid 10% down for 431k at 3.5% interest rate. I am now thinking about refinancing + putting in the additional 10% in order to lose the PMI.
I have a locked rate of 2.75%. The homes in my neighborhood have been selling about $420k and maximum $435k. I wanted to update all bathroom floors and change the master bedroom’s single vanity to a double vanity. Estimate of all these updates would be around $5-$6000.
My mom (who is a realtor in California) said not to bother with the remodel and instead put that remodel cash into the home, as it would decrease my monthly payments and she didn’t believe such remodeling would actually add that much value.

Any opinions here? I’m thinking at the very least to do the floors ($2k) and then not bother with the vanity. Should I just go all in with the remodel or listen to my mom and put that money into the house?

Sherief Elbassuoni · Answer

@Joyce G., doing floors and replacing the single vanity to a double vanity will not change the value a lot. If you wanted to lower what you currently pay, putting the money towards your loan is better than the minor remodel.

Please let me know if you got any questions.

Thanks,

Please let me know if you got any questions.

Thanks,

Nick R. · Answer

I agree, that the updates won't get the 10% to rid yourself of PMI. We did the exact thing you are speaking of when our appraisal came in low once upon a time - we paid down the mortgage principal during a refi to get to the 80LTV so PMI would drop. I would only do this to get the PMI off. Reducing the principal only is not worth it in an environment where you can borrow for 30yrs at 2.75%

Side note, I live in Bothell too. My wife and I flipped our bathroom in a few days for about $500. LVP for $100, a prefabricated counter top with undermount sink at Lowes was $199, a sink faucet was was $79, paint was $50, a modern distressed frame for the mirror $50. We will buy a few accessories like towel bars and TP holder, but you can get it done WAY cheaper than you think and learn along the way.

cheers

Kathy Burnett · Answer

I agree with your mom, the updates probably won't add the 10% you need to get ride of the PMI. Based on the values you are saying, it won't work. I live in the area ...lowering that payment with your cash on hand is better. Then you can save with the extra money you have for your updates.

Should I remodel before refinancing?

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