Financing Your Renovation: What a HELOC Appraiser Is Looking For in a New York City Co-Op Home

Whether you're renovating to resell or to stay in your home and enjoy your design upgrades for years to come, a HELOC can be a good way to finance your renovation. Though it doesn't come with as rigorous a screening process as a first mortgage, a HELOC does require a bit of paperwork. And once you're pre-approved, the lender will order an appraisal. This won't be exactly like the appraisal when you sold your last home — so put down the grout cleaner. Here's what a HELOC appraiser is looking for.

If you've come this far, you've already jumped through some hoops. The lender asked questions about properties you own, your income, and expenses. They ran a credit check and you passed with flying colors. Now the appraisal.

Though hired by the lender, a HELOC appraisal can be viewed as safeguard for both borrower and lender. By providing an up-to-the-minute, accurate valuation of the equity you have in your home, it protects you from borrowing too much against the value of your home (and getting into financial trouble) and it protects the lender from loaning too much.

The Basic Calculation
Banks will generally lend 75-90% of the value of a home for a HELOC — after subtracting the amount you still owe on your mortgage.

Example:

A home appraises for $500,000.  The owner still owes $100,000 on the mortgage. Subtract what's still owed from the appraisal value and there's $400,000. The bank will lend at least 75% of that, or $360k.

So, what is the appraiser looking at in a NYC co-op?

Location and Size
What neighborhood is the home located in, how many square feet of living space, what floor it's located on, and what are the views. These can all come into play. Also, if there's any outdoor space, such as a terrace, rooftop deck, or yard.

Condition:
How old is the unit and how old is the building? Are there signs of deterioration in the building? Is there work being done that could mean an assessment for the shareholders. Have renovations and upgrades been made recently, and if so, have features been added since the last appraisal?

Design and Quality of Fixtures
Once inside your unit, the appraiser will be evaluating the quality of construction and finish work that have already been done. They'll look at the makes and models of the fixed appliances, and any defining features in the current home, such as the view from the windows or architectural details like hardwood floors, cove ceilings, plaster, stone, moldings, and original woodwork.

Amenities
Is the building a doorman building? Is there a parking garage, bike room, fitness room, or communal garden or rooftop?

Preparing for the Appraiser
You really don't need to do any prep work to meet your appraiser, and you can also strike most DIY tasks off your list. The number one thing on your plate is simply to tidy up the place. A clean house makes it easier for the appraiser to see the beauty and improvements in your home.