Quick answer

Refinance once the improvements are complete, permitted (if required), and well documented — and when the numbers make sense: the appraisal shows enough added value, your new rate or cash‑out proceeds outweigh closing costs, and your lender program allows the transaction without extra seasoning requirements.

Why appraisals and documentation matter

  • Lenders rely on a licensed appraisal to set the new value. Appraisers will look for completed work, permits, contractor invoices, before/after photos, and comparable sales (comps).
  • If work isn’t finished or permits are missing, the appraiser may not credit the value increase. Save permits, contractor contracts, paid invoices, and high‑quality photos to submit with your loan application.

Timing — practical guidance

  • Short term: For a standard rate‑and‑term refinance, many conventional lenders will accept an immediate post‑renovation appraisal once the work is finished and permitted. Appraisal scheduling and underwriting usually add 2–6 weeks.
  • Cash‑out and program rules: Some refinance programs (or specific lenders) impose “seasoning” or waiting periods before allowing cash‑out refinancing. Always verify product rules with your lender — requirements vary by loan type and investor.
  • Market timing: Refinancing makes most sense when your expected rate reduction and/or cash proceeds produce net benefit after closing costs and any prepayment penalties on your current loan.

Typical timeline and costs

  • Appraisal: $300–$800 for a standard single‑family home; higher for complex properties or markets. Some lenders accept appraisal waivers, but those are less common after renovations.
  • Processing & underwriting: 2–6 weeks after the appraisal is ordered; total refinance turnaround is often 30–45 days.
  • Closing costs: Expect roughly 2%–5% of the new loan amount (appraisal, title insurance, recording fees, prepaid interest, escrow/impound setup). See our deeper guide on how closing costs change when you refinance: How Closing Costs Change When You Refinance a Mortgage.

How to evaluate whether refinancing is worth it

  1. Calculate monthly savings: old payment minus new payment.
  2. Estimate total refinance costs (closing costs + appraisal + any prepayment penalty).
  3. Break‑even months = total refinance costs ÷ monthly savings.

Example: If closing costs are $6,000 and monthly savings are $200, break‑even = 30 months (6,000 ÷ 200). If you plan to stay in the home longer than the break‑even period, refinancing may be worthwhile.

Refinancing vs other options

  • Cash‑out refinance vs HELOC: If you need renovation cash or to tap equity, compare a cash‑out refinance to a HELOC for fees, interest rate, repayment flexibility, and qualification rules. Our comparison can help: HELOC vs Cash‑Out Refinance: Pros, Cons, and Costs.
  • Rate‑and‑term only: If you only want a lower rate and don’t need cash, rate‑and‑term refinances typically have fewer program restrictions than cash‑out loans.

Practical preparation checklist

  • Finish work and obtain all permits/inspections.
  • Collect contractor agreements, paid invoices, and photos showing before/after.
  • Order a pre‑refinance market valuation or broker opinion if you want an early estimate of the value uplift.
  • Pull together standard refinance documents (pay stubs, tax returns, proof of insurance). Use our Refinance Checklist to prepare paperwork.

Common mistakes to avoid

  • Refinancing before permits/inspections are closed — this can reduce appraised value or cause delays.
  • Overestimating value increases — not all improvements produce dollar‑for‑dollar returns.
  • Ignoring program rules — cash‑out or government loan products may require waiting periods or additional documentation.

Professional tips (from practice)

  • Get a contractor to finalize permits quickly and keep a clear invoice trail; appraisers and underwriters give weight to documented costs and permits.
  • Shop lenders for program rules as well as rates. One lender may allow immediate refinancing after renovation while another requires seasoning for cash‑out proceeds.
  • Ask the lender whether they’ll accept the appraisal alone or need a full inspection/insurance updates (roofs, HVAC) after major work.

Regulatory and authoritative sources

  • Consumer Financial Protection Bureau (CFPB), “Refinancing a Mortgage” — general guidance on refinance types and costs: https://www.consumerfinance.gov
  • National Association of Realtors (NAR), Cost vs. Value reports — data on remodeling returns: https://www.nar.realtor

Disclaimer

This article is educational and not individualized financial advice. Rules and program requirements change; consult your lender or a licensed mortgage professional for decisions tailored to your situation.