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Discussion Starter #1
So, heres the dilema I'm facing.<br><br><br>
I live in a 2story, 3bdroom, 1 bathroom home. Its dh and I and our 5 (6 every other weekend) kids. And 3 cats. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile"> Our basement is unfinished. As the oldest is 16 (and the rest are just getting bigger and bigger), we could really use the extra living space. We've had a few quotes to do the basement and the average cost would be approx $20,000 -25,000 to finish it. (including a second bathroom)<br><br>
We bought the home right before the housing market went thru the roof. So, we could sell our home for 2x what we paid for it, so theres definitly some equity there. But, do I want to refinance and add another $25000 onto my mortgage?<br><br>
Ack. Tell me what to do. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile">
 

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Oh I would do it! You will always get the money back that you put into your home, especially to finish the basement. It also sounds like you need the room so that's two pluses.
 

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I think it would be worth it. Take into consideration, though, the costs to refinance. I have been looking into it and it is not cheap. Especially if you have to take out a construction loan. The way it will work for us is we will pay interest on the construction loan during the construction phase and then will roll it all into a new mortgage. When we refinance, our current mortgage and the construction loan will be rolled into one mortgage. During the construction time, we will have to pay for the interest on the construction loan and our current mortgage.<br><br>
I think if the market has jumped so much, it would be worth the remodel because you would pay some much for a bigger house. Check all your options, home equity loan, refinance, etc. to see what would work best for you.
 

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Discussion Starter #4
whats a construction loan?<br><br>
I know we may have to pay a penalty to change our mortgage now - since its not renewal time yet. But we could always leverage that fee out of there. We're long time customers. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/winky.gif" style="border:0px solid;" title="Wink"> I do worry about the interest rate, we're at 4.70 % and the lowest I've seen posted is 5.6 %, so I'd really hate to lose that. I'm hoping we'd be able to leverage that too.<br><br>
Ah, a finished basement would be soooo nice. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile">
 

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Can you take out a home equity loan?<br><br>
You would have two loans, two payments every month but could keep your locaked in rate on the house. Then through everything extra at the home equity loan till it's gone.
 

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I would probably do it. It sounds like you need the extra space.<br><br>
Keep in mind, though, that it many states, if you do decide to sell your house you will not be able to count the bedrooms that you add in the basement as *actual* bedrooms (unless you are in a walkout-basement or english basement situation). SO in the MLS, your home would still come up as a 3 bedroom home. It doesn't sound like you will be selling anytime soon, so it shouldn't matter, just pointing that out to you.<br><br>
Really, $25000 won't add THAT much to your monthly payment. We have a *yikes* $41000 home equity loan and our payment is about $300 a month on that.<br><br>
Good luck on your decision.
 

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<div>Originally Posted by <strong>Shenjall</strong> <a href="/community/forum/post/7996476"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">whats a construction loan?<br><br>
I know we may have to pay a penalty to change our mortgage now - since its not renewal time yet. But we could always leverage that fee out of there. We're long time customers. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/winky.gif" style="border:0px solid;" title="Wink"> I do worry about the interest rate, we're at 4.70 % and the lowest I've seen posted is 5.6 %, so I'd really hate to lose that. I'm hoping we'd be able to leverage that too.<br><br>
Ah, a finished basement would be soooo nice. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/smile.gif" style="border:0px solid;" title="smile"></div>
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</tr></table></div>
Remodel construction loans are used if you are planning on a major remodel and addition of your current home or buying an existing home with the intention of completing a major remodel and addition. A major remodel loan works very similar to a new construction loan; plans and a complete construction budget are required to determine the cost and loan amount. A plan & spec appraisal of the completed or future value of the remodel home will be used. The remodel construction loan will require the current mortgage to be replaced with the remodel construction loan.<br><br>
Remodel construction loans require that all the costs be included in the new loan including:<br>
1) Existing property house payoff (loan amount).<br>
2) Construction soft costs, such as architectural plans, permit fees etc.<br>
3) Construction hard costs, including all the building materials and labor.<br>
4) Remodel loan-closing cost, such as loan fees, title fees, escrow, taxes, etc.<br>
5) Construction Interest reserve, an account that will make the payments on the remodel construction loan during construction.<br>
6) Construction contingency reserve, a reserve account that will buffer against unexpected cost overruns.
 

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Discussion Starter #9
I'm in canada, so I dont think any remodel/loan would be tax deductible. There are a few things we can do (energy effecient upgrades) that may get us a small break on our property taxes. (We did that last year when we replaced some of our windows)<br><br>
I think we have to call our bank rep to see what we can do and what else is available to us.<br><br>
Thanks everyone!
 

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As long as the rooms in the basement have an egress sized window (which they have to for code) and a closet they can be considered a bedroom.<br><br>
I would do it. You need the space and your only going to need it more in the next few years when your other kids get older.
 

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Discussion Starter #11
When we replaced the windows last year, we kept in mind that we planned on someday putting a bedroom down there. So that part is up to code already. We dont plan on selling - ever. We bought the house knowing it was our last. But, if something were to happen to force us to sell, I do know the bedroom would be considered. But it would be listed as , "3 + 1 bdroom" or something to that effect.<br><br>
If we can work out the same interest rate (which we might be able to) then our payment would only jump up by $150, which is doable.<br><br>
I really want to do it, I just hate the thought of adding $25000 to my debt. I'm cheap, I hate spending money. (well, except on fabric <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"> )
 
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