Home Equity Loan????

[aebsledder]

I have been pondering building an addition onto my house this spring, our family has grown by one and we could use a little extra space. I bought my house a while ago when the market was reasonable and I have a pretty good amount of equity built up. I know that cash is king, but I wouldn't want to deplete our family savings to a point that I am not comfortable. I would be able to perform a lot of the work myself (Check out my sweet man cave thread in this section...) and think about 60K would get er done. I think I could do the addition for probably 40ish, but I would redo all the siding on my entire house and probably improve the houses envelope and mechanical system. Let's just use these figures in nice round numbers to give you some background (they aren't exact, gotta maintain some anonymity)
Current mortgage amount- 50k
Current value of home-150k
Amount of Equity-100k

So, say I go the full 60K, technically still about 40K in equity remaing. I do think my value of the home would go up, but I would be one of the bigger houses in the neighborhood and probably wouldn't see much over an additional 20-30K in value. We don't live in the fanciest neighborhood in town, but the location is great. What say ye? Anybody go down this road before? Anything you would do different? Or do I just sell it and move on to something else???

 

[801]

ya could do that and have some equity~~ but if the market goes down ya lose that~ to maybe no equity~ in this economy it is really risky in my book~

 

[aebsledder]

Good point

ya could do that and have some equity~~ but if the market goes down ya lose that~ to maybe no equity~ in this economy it is really risky in my book~

That has definitely crossed my mind...Although I think it would probably take a financial disaster of epic proportions on a national level for me to dip below what I would ever make on it. Absolute worst case scenario I would probably break even. There is always a little risk in everything though..

 

[Dobber1]

TIME OUT!!!

Take a few hours and listen to The Dave Ramsey Show on iHeart Radio and report back to us if you have changed your mind.

You haven't furnished me with enough information (which I don't really want to know) to give you my opinion, but I think a lot of people on this forum would lead you down the wrong road.

Let me know what you think. Wish I was 37 again.

 

[aebsledder]

Thanks

Well, if we are talking in Dave Ramseyisms, it appears I have baby steps 1-5 down no problem. Luckily, I was able to glean that particular nugget of wisdom without paying $129 and attending his "Financial Peace University".
Not sure of the exact curriculum of that institute of higher learning, but I bet it would cover paying off high interest debts, saving for the future, etc, etc..

So without delving into the intricacies of my financial portfolio, I was mainly interested in seeing if anyone else had gone through a similar process. I.E.

I live in so and so neighborhood and built an addition for so and so dollars and I paid for it doing so and so. My experience was this.... I am sure there is undoubtedly better forums out there to get input, but I have seen similar threads in fouled plug...

 

[Bowfisher]

Do you like the house? What could $210k buy you in your area? I've been dumping a good bit of money each year for the last three years into my current house and I was considering doing an expansion here in the next year or two. We really got to thinking about it and decided it wouldn't be worth it because we don't really like the house and it would be on the upper scale of our neighborhood and probably wouldn't be able to recover our money. I say if you like the house and location and don't want to move go for it, but you might want to look around to see what that extra money could get you into.

 

[aebsledder]

Do you like the house? What could $210k buy you in your area? I've been dumping a good bit of money each year for the last three years into my current house and I was considering doing an expansion here in the next year or two. We really got to thinking about it and decided it wouldn't be worth it because we don't really like the house and it would be on the upper scale of our neighborhood and probably wouldn't be able to recover our money. I say if you like the house and location and don't want to move go for it, but you might want to look around to see what that extra money could get you into.

I would say this is my biggest struggle. Is the house "perfect" for our family? No. I wish it had a bigger garage, driveway, etc. But in our market, it seems like the next step up is going to be about 30-40k more than I would feel comfortable spending. I absolutely despise having payments on things, but I can muster a house payment as so far my home has probably been my best investment. Our main issue is space...we have a little girl now and maybe another kid soon (who knows) and our house isn't set up very well for a family. It is an open concept home with the living/dining/kitchen all in one spot with virtually no separation. My plan was to add another 600sq ft and put in another bedroom, 3/4 bath, and living room. This would create more separation, more storage, etc. Would bring me up to about 2,000 sq ft. There a very few 2,000 sq ft houses on the market here. Seems like quite a few in the 1500-1800, but with virtually the same floor plan. Then you make the jump to about the 2400-2800 mark, and pay more than I would care too. Decisions, decisions....

 

[rdr99]

If you are happy where you live and not planning on moving up, then I would say go for it. If you plan on moving in the next 10 years, not sure I would bother. Another thing, we own a four bedroom, but it is only classed as a 3 bedroom because of the septic system. What is the housing market like in the Gallatin? I know it was booming for awhile...

 

[aebsledder]

If you are happy where you live and not planning on moving up, then I would say go for it. If you plan on moving in the next 10 years, not sure I would bother. Another thing, we own a four bedroom, but it is only classed as a 3 bedroom because of the septic system. What is the housing market like in the Gallatin? I know it was booming for awhile...

I would describe the housing market as healthy but unpredictable. I don't think it is quite near the boom of 2001-2002 but there is definitely some building going on. My wife and I looked this summer fairly hard, and we saw quite a few houses. Heck, we even made an offer on one. We sort of got screwed on the deal, but I felt a slight sense of relief after it was all said and done. The house was alot bigger and had a bunch of potential. Although it wasn't in near as good of a location. That was a major reason I started contemplating building an addition. When I put pen to paper it definitely was the cheaper route to go to build an addition.