Renovate? Move? feeling stuck!

[tagreen0927]

I am hoping someone can offer some direction to our situation.

We bought our home in 2006. We love the location and overall floor plan, but knew when we bought it we'd want to add on to the heart of our living space: the kitchen, dining, family room area. We paid 180k ( was appraised at 186k at purchase). Currently owe $170 ish.

Like most areas, housing values in Ohio have plummeted. Zillow.com has our home at $141k with range of $129k to $174k.

We make a good living of $170k per year and little debt (monthly: $1225 mortgage, includes taxes, $85 student loan, $100 credit card; recently paid off car loans).

I am desperate to have more space for our family. An additional 600 to 750 more sq ft would do it, before my kids grow up! Our kitchen and dining area combined is tiny. Don't need anything fancy.

Problem: how can we get a loan to pay for it with such negative equity? We don't have cash reserves to pay ourselves. Are we better off moving, but would want to stay in our current town? Because we couldn't sell, we'd have to come up with a chunk of change for a down payment on the second house and have enough reserves for the first mortgage. And we love our location. Are we crazy for even thinking about putting more money into a home that is so underwater? Any one out there with some advice or guidance? Your feedback is greatly appreciated.

[IOBA]

With high income and low bills, would it be difficult to save some money to pay for the remodel?

Moving, selling, and buying will cost a chunk of change...

[tagreen0927]

Thanks IOBA for the reply.  We've been rebuilding our savings for the emergency fund.  I think we could save more after the emergency fund is rebuilt, but certainly going to take some time as the addition cost, I am guessing, might be close to $60,000.  I am torn between really wanting and needing more space with the idea of soaking more money into a home that is already so far underwater.  I appreciate you taking time to comment.  Thanks!

[IOBA]

Another thought....and I don't know if it's doable or not.  FHA offers rehab loans (503k loans?).   

Basically they appraise your house as is and estimate the value after the remodel/renovation is done.  Then the loan amount is decided based on the after work expected appraisal estimate.   I think you would need to have at least drawings or conceptions/bids/estimates in hand for the appraiser to see what you plan to do.

Once the lender approves of the loan, payments are doled out based on the work accomplished.   

It might mean being very conservative and cutting corners, but it might be enough money to get the job (bare bones) done.

I can't relate too feeling too crowded, but I can't stand clutter.

I CAN relate to the desire/personal need to move to have a place that better suites my needs.  i am in that space now...and it is uncomfortable.  But the reality is, in time everything will work out.

[tagreen0927]

Thanks for the advice...I'll check into the FHA renovate loan.  I too cannot stand clutter!  I purge constantly, sometimes too much!  Our dining area barely fits a table of four for our own family, much less for holidays.  I get even more frustrated this time of year when family and friends are over and no place to go.  I thought about tearing down walls, but the floor plan doesn't really allow me to do that.  Keeping my fingers crossed on the FHA program.  Will let you know what I find out. 

[IOBA]

I should share with you that two of us live in about 600 sq ft....but it doesn't feel crowded.  If we ever get the house, we won't know what to do with 2x the space.  

Find out if the walls you currently have that "stand in the way" are load bearing walls.  If they are, you can usually cut a window in them and open up some space.

If they are not load bearing walls, then you can remove them, creating a more open floor plan.  

Third option - you need more storage, so consider putting cabinets or shelves up high on the walls, near the ceilings.  You will gain great storage for those things you don't need to access everyday.

Our place is pretty small.   In the laundry room (no washer/dryer), we put our freezer (big stand up - we don't have a fridge) and shelving.  I have to stand on my tippy toes sometimes to reach the top shelf, but it's stuff we need to keep but dont' need to access much (like warranties, planters, tools).   In the bathroom, we added three kitchen cabinets stacked up on each other to provide more storage space.  We also put a cabinet over the toilet (one designed for the bathroom).  The bathroom didn't have a medicine cabinet but had a super small under the sink cabinet.  One wall is (living room) is cabinets with an open space for a tv.  lol - don't have cable or satellite, but dang it, we have a space for a tv.      In the closet, we added a second hanging row for clothes (no dressers here!) and added a small section (about a foot long) of shelving.  We store socks, scarves, etc in plastic containers on the shelves.  Shoes (like biking shoes, hiking boots, etc) are stored in plastic shoe boxes and stacked up.

The rule in our house, especially when the kids are around, is everything has to be put away.  I don't care if you are going to come back to that project in 15 minutes, you put it away.   When the kids were growing up, the rule was always to put things away.  NOTHING could be left in the common area.

I hope these ideas help short term for feeling like you have more space in your house.  

Keep up the decluttering.  As much as I thought we couldn't get rid of anything else, I am finding that even in this limited space (think smaller than a hotel room with double beds), there is always more stuff to get rid of.  

Please let us know how things go...what you do to feel like you have more with the space you currently have.