A "chicken and egg" problem

[Anonymous]

We want to refinance our house or get a HELOC or both. The problem is, we need to make some repairs that will cost approximately $3,600.00 in order to pass a home inspection. If we apply for credit to cover the cost of the home repairs, how much will that negatively impact the rate we're able to qualify for on the refi or HELOC? Thanks so much for your help. (Current scores are 751,703,753)

[Anonymous]

For home improvements/renovations, I know you can apply for an amount based on the value of the home after improvements.

[Anonymous]

You mean, we can get approved for a refinance or HELOC, based on getting necessary repairs done to pass the inspection?

[ShanetheMortgageMan]

There are a good amount of HELOC lenders which do not require a full appraisal on a property - most start off by going with an AVM (automated value model) which is a computer based appraisal and if the home's value is on target, then no appraisal is needed.  Further, there are HELOC lenders who will hold back a portion of the HELOC from the available amount of funds until the repairs are completed, then once the repairs are completed, will do an additional inspection, and release the held back portion fo the HELOC.

[Anonymous]

"There are a good amount of HELOC lenders which do not require a full appraisal on a property - most start off by going with an AVM (automated value model) which is a computer based appraisal and if the home's value is on target, then no appraisal is needed."

Hi Shane, We were advised by a mortgage broker to apply for a HELOC with our regular bank (a big, regional bank in the Southeast). Would that be the type of lender you're talking about? And how long does it usually take from application to closing to get a HELOC? Thanks for your help!

[ShanetheMortgageMan]

Yeah that would be the type of bank I was referring to - usually takes around 5-20 days depending on the lenders process.  To find out exactly just ask that to the lender as an upfront question.