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A Refinance Remodel Story: How I Got a New Kitchen

updated kitchenThis is a story about how I used the refinance remodel option to get a new kitchen. Once upon a time I wanted a new kitchen. My wife and I looked around our house and realized that we'd be here for a long time, and it was time to invest some money in one of the rooms where we spent most of our time. When friends come over, we end up shooting the breeze in the kitchen. Between food prep, cooking and clean-up we're in the kitchen almost every night for at least a couple hours it seems like. So as we looked around the kitchen that looked like it was built and decorated in the 1980s we decided it was time for a remodeling project. The problem: cost.

How much does a kitchen remodel cost? Of course that depends on what we wanted to have done. But we knew that since we'd be here for years to come, it was worth a good-sized budget. After all, we needed new appliances, cabinets, counters and flooring. We were even considering adding an island with an extra sink. That would include new plumbing.


This is where we decided to do a little research. We knew our equity was low-to-zero, so a home equity line of credit was out. Our cash reserves were decent, but far from a large kitchen remodel budget. I wanted to avoid using credit cards or store credit. That's when we found the refinance remodel option: FHA 203k.


The 203k would let us refinance the house, adding in the cost of our kitchen remodel. With the refinance remodel route we found that we could base the loan amount on the after-improved value of the house rather than the current equity. We could use the future value of the house to actually add the value we were trying to build! It sounds like circular logic, but it sounded good to us.


We got to work on the mortgage pre-approval process to make sure our credit was good. It was right on - in the mid-600 range. We also wanted to make sure the house was a good FHA 203k candidate. Then we got to work on figuring out what we wanted in a new kitchen.


Once our dream list was done, we talked to our 203k expert mortgage lender about the value our projects would add, and whether it was worth the cost. We managed to weed out a few extras like the greenhouse window installation and wet bar (my ideas, but they wouldn't add enough value) and got an estimate on the rest of the work from a licensed contractor.


I was glad the 203k is not a DIY loan. I didn't want to try and figure out when I'd have time to do the work we wanted. It was better to have a good builder do the work quickly and correctly. After we closed on the refinancing, the builder got to work and we had our new kitchen in no time. I'm glad we went with the refinance remodel option to get our new kitchen. Now we have a great place to gather!


Download  the free guide - "The Ultimate Guide to Renovation Loans" at the button below.  Get your copy today and get started planning your new kitchen!

Ultimate Guide to Renovation Loans

*This is a work of fiction, based on anecdotes I've heard over the years. I don't have a new kitchen.


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