This is just a sound practice in general. How'd you start work without $$$?

That sounds like a crazy business practice to me one to gouge the homeowner/borrower. Don't know if you looked at any other lenders. If the house appraised at double the loan rate with an incomplete bathroom, how could it lose value based on the bathroom, even if it never was completed? It can't be 1/2 the value of the home. How much of your loan refinance savings will be eaten up by the interest you lose on escrow and paying for reappraisal? Do you belong to a credit union? I'd check with some of those.

We refi'd 2 years ago, in the midst of our ongoing renovations (which are still incomplete). We did it just to lower the interest rate, not to finance the remodeling. We had several unfinished rooms at the time, but the appraiser dealt with it by just lowering the appraisal by $10K to account for the unfinished work. Our LTV was 60%, so that was likely a factor. But the bank had no problem approving it.

there are a number of banks that do an automatic appraisal process, they don't even come and look at your house.

Most lenders are very leery of financing homes in any stage of construction at this point. They already have a ton of them on the books that were about 1/2 way through a flip and the owners ran out of money. Most are looking for plain vanilla loans and anything unusual better be bringing a significant percentage of cash/equity to the table.

This is great advice. Not all refinances are about drawing additional funds for renovation. Some (as was the case for me) are simply to take advantage of low interest rates and/or change the terms of the mortgage. I ran into a similar situation with a recent refinance (to decrease interest rates and the duration of the loan), but was thankfully spared when the tax value for the home was high enough not to require an appraisal. Perhaps this is common knowledge for some, but not everyone knows about these things. Thanks for sharing.