Home Addition Finance

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BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Home Addition Finance

Post by BK121508 » Fri Jul 27, 2018 1:15 pm

Hi All,

First time poster. Much respect for the folks on here as I've lurked and read over the years.


Unfortunately, my wife wants to either make our tudor home an open layout or move to a new build in the suburbs.

Most of the answers for anything financial are "this what I would do, but depends on your situation"....

So:
Bought only 1 year ago. :( (sad my wife is unhappy)
675K purchase, super desirable area and street, most homes are over 1million on street, would prefer to stay on this street and location rest of our life
500K left on mortgage still @ 3.85%
110K school loan debt @3% to family member, currently paying around 6K-8K/month but minimum is 2K/mo per our agreement
33yo, two little ones, both of us work, stable jobs, 540K income combined, 401Ks about 225K and both allow loans
80K in cash for emergency funds that I hate parting ways with

The addition for kitchen and additional bedroom is 200K.


Just started researching my options, but if I really really really did not want to move, what's the best way to go about this?

We can wait 2 years and have the cash plus a cushion, but not sure my wife will have the patience (I don't blame her, we have a bad layout)

Any suggestions in terms of financing? I hate the idea of 6+% interest loans.

renue74
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Re: Home Addition Finance

Post by renue74 » Fri Jul 27, 2018 1:30 pm

Make sure you don't overprice your house for your neighborhood. It's better to not have the most expensive house in the hood.

Are you prepared to live in a long term remodel? I hear remodeling is one of the highest stressors of a marriage.

If not happy with a new house, I would probably take the wait and see approach. Give it some time and then if not happy, I would sell.

barnaclebob
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Re: Home Addition Finance

Post by barnaclebob » Fri Jul 27, 2018 1:37 pm

What is bad about the layout and why is your wife unhappy with it? Many old houses are ruined by "opening" them up and putting in contemporary kitchens that don't fit the house.

mervinj7
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Re: Home Addition Finance

Post by mervinj7 » Fri Jul 27, 2018 1:48 pm

I would pay off your student loan debt before considering taking on more debt for a home remodel. Otherwise, it looks like your family member is subsidizing your home wants (not needs, by the way). So that gives you two years to live in your house and decide on which path to take. If you do decide to remodel, you can take out a Home Equity Line of Credit. You get the best rates if you keep your total loan to value ratio < 80% but many banks also offer HELOCs with LTV <90% with a slightly higher loan rate.

-buzz-
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Location: USA

Re: Home Addition Finance

Post by -buzz- » Fri Jul 27, 2018 2:22 pm

BK121508 wrote:
Fri Jul 27, 2018 1:15 pm

We can wait 2 years and have the cash plus a cushion, but not sure my wife will have the patience (I don't blame her, we have a bad layout)
Think about what puts you in the best position 5-10 years from now.

You love the location, the property is workable long term with some improvements, and have locked in a low mortgage rate. It sounds like it would not be overbuilt compared to other properties on the street even after the addition.

My advice is to wait until you can pay cash.

The more you save per month, the faster you get the addition done. This provides incentive to watch your budget and get there as quickly as possible.

You'll have to assess whether the student loan from a family member is a problem if you drop down to the $2k/month agreed payment plan or would feel bitterly if you were putting an addition on your house while paying them minimums. If either of those is true, then you need to pay off the loan first.

Jack FFR1846
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Re: Home Addition Finance

Post by Jack FFR1846 » Fri Jul 27, 2018 2:35 pm

Listen to my house layout and maybe it would help you realize that yours is not so bad.

We have an office which used to be a hot tub room. You can enter it from any of 4 ways (it's about 100 square feet). From outside, from the upstairs bedroom via spiral staircase, from small downstairs bedroom, from small bathroom where the master bedroom is on the other side.

Our upstairs (cape with shed dormer) is mostly one huge room. Except for a half bath next to the stairs at one end and the bedroom at the other end (that has the spiral stairs in it going to the office downstairs).

We had an architect look through the house when we were looking to do an addition. He got lost.
Bogle: Smart Beta is stupid

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Pajamas
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Re: Home Addition Finance

Post by Pajamas » Fri Jul 27, 2018 2:40 pm

BK121508 wrote:
Fri Jul 27, 2018 1:15 pm

Unfortunately, my wife wants to either make our tudor home an open layout or move to a new build in the suburbs. . . .

Bought only 1 year ago. :( (sad my wife is unhappy) . . .

We can wait 2 years and have the cash plus a cushion, but not sure my wife will have the patience (I don't blame her, we have a bad layout). . .
What led you to buy a house that you and your wife don't like and what makes you think trying to fix it will make you happy with it?

For that matter, what even makes you think that moving to a different house will make you happy?

I suspect that she is the one who is actually unhappy and you are just unhappy because she's unhappy. Start by trying to figure out what will actually make her happy. I doubt a house is going to do it.

delamer
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Re: Home Addition Finance

Post by delamer » Fri Jul 27, 2018 3:24 pm

-buzz- wrote:
Fri Jul 27, 2018 2:22 pm
BK121508 wrote:
Fri Jul 27, 2018 1:15 pm

We can wait 2 years and have the cash plus a cushion, but not sure my wife will have the patience (I don't blame her, we have a bad layout)
Think about what puts you in the best position 5-10 years from now.

You love the location, the property is workable long term with some improvements, and have locked in a low mortgage rate. It sounds like it would not be overbuilt compared to other properties on the street even after the addition.

My advice is to wait until you can pay cash.

The more you save per month, the faster you get the addition done. This provides incentive to watch your budget and get there as quickly as possible.

You'll have to assess whether the student loan from a family member is a problem if you drop down to the $2k/month agreed payment plan or would feel bitterly if you were putting an addition on your house while paying them minimums. If either of those is true, then you need to pay off the loan first.
Good advice. If your jobs are stable, you don’t need a $80,000 emergency fund. Take 1/2 of it toward the addition and with your joint incomes, I’d assume you could accumulate the $200,000 in 16 months, saving $10,000/moth.

AlphaPilot
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Re: Home Addition Finance

Post by AlphaPilot » Fri Jul 27, 2018 3:33 pm

Just thinking outside the box here. $200k for a two room addition on a 675k home seems asinine. Especially when it's "opening up" something such as the current kitchen. I assume for $200k you are adding on a good chunk to the house which includes foundation work, framing, siding, windows, and of course more roof. $200k is more than I spent on my entire house build and that was materials to build 1200sq/ft + 900sq ft garage. I realize markets are vastly different, but wow!

delamer
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Re: Home Addition Finance

Post by delamer » Fri Jul 27, 2018 3:40 pm

AlphaPilot wrote:
Fri Jul 27, 2018 3:33 pm
Just thinking outside the box here. $200k for a two room addition on a 675k home seems asinine. Especially when it's "opening up" something such as the current kitchen. I assume for $200k you are adding on a good chunk to the house which includes foundation work, framing, siding, windows, and of course more roof. $200k is more than I spent on my entire house build and that was materials to build 1200sq/ft + 900sq ft garage. I realize markets are vastly different, but wow!
I don’t see the problem; we gutted the kitchen and added square footage at a cost of about 20% of our house value. And also in a neighborhood where our house was the least expensive home, like the OP. OP’s percentage is a bit higher, but not outrageous.

BK121508
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Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Fri Jul 27, 2018 4:04 pm

renue74 wrote:
Fri Jul 27, 2018 1:30 pm
Make sure you don't overprice your house for your neighborhood. It's better to not have the most expensive house in the hood.

Are you prepared to live in a long term remodel? I hear remodeling is one of the highest stressors of a marriage.

If not happy with a new house, I would probably take the wait and see approach. Give it some time and then if not happy, I would sell.

I don't think a home on the street has sold under 900K. That was three years ago. So with 200-250K into 675K we would still be cheapest.

Not my wife is totally ready for the long term remodel if we lived here. We would probably live at her parents house like we have in the past for 3-4 months. Wouldn't be terrible.

BK121508
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Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Fri Jul 27, 2018 4:06 pm

barnaclebob wrote:
Fri Jul 27, 2018 1:37 pm
What is bad about the layout and why is your wife unhappy with it? Many old houses are ruined by "opening" them up and putting in contemporary kitchens that don't fit the house.
It's a long galley kitchen with no option for kitchen island. Isolated away from playroom and living room. Bad entertaining home. I can't disagree with her. Even if we took out walls it still wouldn't be the more open concept she wants now.

I totally agree with you about putting a modern kitchen in a charming tudor.

BK121508
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Re: Home Addition Finance

Post by BK121508 » Fri Jul 27, 2018 4:08 pm

mervinj7 wrote:
Fri Jul 27, 2018 1:48 pm
I would pay off your student loan debt before considering taking on more debt for a home remodel. Otherwise, it looks like your family member is subsidizing your home wants (not needs, by the way). So that gives you two years to live in your house and decide on which path to take. If you do decide to remodel, you can take out a Home Equity Line of Credit. You get the best rates if you keep your total loan to value ratio < 80% but many banks also offer HELOCs with LTV <90% with a slightly higher loan rate.
I 100% agree with you that we shouldn't do anything before paying off the loan to family member. I think it'd be wrong. They are well off and it wouldn't really mean anything to them, but still the principle of it. It's also her parents. Yikes.

BK121508
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Re: Home Addition Finance

Post by BK121508 » Fri Jul 27, 2018 4:09 pm

-buzz- wrote:
Fri Jul 27, 2018 2:22 pm
BK121508 wrote:
Fri Jul 27, 2018 1:15 pm

We can wait 2 years and have the cash plus a cushion, but not sure my wife will have the patience (I don't blame her, we have a bad layout)
Think about what puts you in the best position 5-10 years from now.

You love the location, the property is workable long term with some improvements, and have locked in a low mortgage rate. It sounds like it would not be overbuilt compared to other properties on the street even after the addition.

My advice is to wait until you can pay cash.

The more you save per month, the faster you get the addition done. This provides incentive to watch your budget and get there as quickly as possible.

You'll have to assess whether the student loan from a family member is a problem if you drop down to the $2k/month agreed payment plan or would feel bitterly if you were putting an addition on your house while paying them minimums. If either of those is true, then you need to pay off the loan first.

This really hits home with me. I think this is great advice and makes sense.

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Fri Jul 27, 2018 4:12 pm

Pajamas wrote:
Fri Jul 27, 2018 2:40 pm
BK121508 wrote:
Fri Jul 27, 2018 1:15 pm

Unfortunately, my wife wants to either make our tudor home an open layout or move to a new build in the suburbs. . . .

Bought only 1 year ago. :( (sad my wife is unhappy) . . .

We can wait 2 years and have the cash plus a cushion, but not sure my wife will have the patience (I don't blame her, we have a bad layout). . .
What led you to buy a house that you and your wife don't like and what makes you think trying to fix it will make you happy with it?

For that matter, what even makes you think that moving to a different house will make you happy?

I suspect that she is the one who is actually unhappy and you are just unhappy because she's unhappy. Start by trying to figure out what will actually make her happy. I doubt a house is going to do it.
That's a great question. She's rather impatient. We were in Boston and moving back home. Market was pricey so we gave up. Then all of the sudden this home popped up on our "dream street". No lie we used to run down the street and say one day we would love to live here. We made a full price offer after my mother in law visited the home with our sister in law (realtor), and we saw it on facetime. So honestly, I never even saw the place. Not a good life decision.

BK121508
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Re: Home Addition Finance

Post by BK121508 » Fri Jul 27, 2018 4:13 pm

Pajamas wrote:
Fri Jul 27, 2018 2:40 pm
BK121508 wrote:
Fri Jul 27, 2018 1:15 pm

Unfortunately, my wife wants to either make our tudor home an open layout or move to a new build in the suburbs. . . .

Bought only 1 year ago. :( (sad my wife is unhappy) . . .

We can wait 2 years and have the cash plus a cushion, but not sure my wife will have the patience (I don't blame her, we have a bad layout). . .
What led you to buy a house that you and your wife don't like and what makes you think trying to fix it will make you happy with it?

For that matter, what even makes you think that moving to a different house will make you happy?

I suspect that she is the one who is actually unhappy and you are just unhappy because she's unhappy. Start by trying to figure out what will actually make her happy. I doubt a house is going to do it.
the lack of open layout and completely segregated rooms is what is making her frustrated and unhappy. we have family over all the time and friends over. it's an awkward layout

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Pajamas
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Re: Home Addition Finance

Post by Pajamas » Fri Jul 27, 2018 4:22 pm

BK121508 wrote:
Fri Jul 27, 2018 4:13 pm

the lack of open layout and completely segregated rooms is what is making her frustrated and unhappy. we have family over all the time and friends over. it's an awkward layout
I still find it hard to believe that her happiness in life hinges on an open layout in her dwelling.

Given what you said just above, don't make any more hasty decisions regarding your house. They are costly. Take some time to think this through. And leave your mother in law and real estate agent sister in law out of any future decisions.

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willthrill81
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Re: Home Addition Finance

Post by willthrill81 » Fri Jul 27, 2018 4:26 pm

Pajamas wrote:
Fri Jul 27, 2018 4:22 pm
BK121508 wrote:
Fri Jul 27, 2018 4:13 pm

the lack of open layout and completely segregated rooms is what is making her frustrated and unhappy. we have family over all the time and friends over. it's an awkward layout
I still find it hard to believe that her happiness in life hinges on an open layout in her dwelling.

Given what you said just above, don't make any more hasty decisions regarding your house. They are costly. Take some time to think this through. And leave your mother in law and real estate agent sister in law out of any future decisions.
:thumbsup

And in the meantime, knock out a lot of that debt. A family who has made over $500k a year for any length of time has no business with a dime in student loans. Yes, the interest rate is low, but family debt is horrific. Trust me on that one.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

getthatmarshmallow
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Re: Home Addition Finance

Post by getthatmarshmallow » Fri Jul 27, 2018 4:34 pm

I feel ya. Galley kitchens are the second worst kitchen thing ever. But remodels are the worst.

Make a plan to pay off the debt and then revisit the kitchen remodel. You'll be in a better place to decide whether you want to move to a place designed for an open-plan kitchen, or if a remodel is feasible (not every house is suitable for it. ours isn't.)

Nissanzx1
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Re: Home Addition Finance

Post by Nissanzx1 » Sat Jul 28, 2018 1:29 am

Can't imagine the look on the family members face when they visit and see the addition.... I'd be clearing that family loan up yesterday. Congrats on fantastic incomes..

Nate79
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Re: Home Addition Finance

Post by Nate79 » Sat Jul 28, 2018 1:54 am

Pay off all non house debt first then build up and pay in cash. You make too much money to have that much debt.

BK121508
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Re: Home Addition Finance

Post by BK121508 » Sat Jul 28, 2018 11:50 am

I really appreciate all the replies and advice. I think you guys and gals told me exactly what I needed to hear and exactly what I was thinking. Patience patience patience and rid the debt.

jminv
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Re: Home Addition Finance

Post by jminv » Sat Jul 28, 2018 12:59 pm

Payoff the loan from the family member before you do anything to the house. The optics of that would not be great. You can pay it off in 3 months with the cash reserves and current paydown rate, although you did say you want to keep your reserves. You could then remodel it in two years with the extra cash flow.

If you did the remodel and sold tomorrow, you'd more than likely not get your money back. Best not to think that you can raise a price of a home from 675 to 900 with adding an extra bedroom and remodeling the kitchen area, just because no other homes on the street have sold recently for less than 900. I'd be more likely to sell the house as is and buy one that I actually wanted in this situation. It would be the better move. I'd also have her commit to the new place completely as in agreeing that you all would do no work on it after buying it. Maybe this approach would also get her to hold off on the remodeling and stay put for a couple years since it might not look great to the family to buy one year and move the next. This would be good for you financially in the interim.

Although you didn't see it in person, you undoubtedly both looked at it online as well as Facetime, before buying it so you must have had an idea about what it was like in terms of layout. From what you said, it seemed more of an impulse/compromise buy because the price was what you all could afford at the time and it was on the street you liked. Is the reason for this actually because you are now making more reason that she feels she should be able to spend more? This is something to nip in the bud if that's even partly the case because of the importance of compounding from an early age. If this is the case at all, you will do the remodel and end up upgrading to a new place in the future, anyway, so best to just move and avoid sinking money into this.

-buzz-
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Location: USA

Re: Home Addition Finance

Post by -buzz- » Sat Jul 28, 2018 3:21 pm

BK121508 wrote:
Fri Jul 27, 2018 4:09 pm

This really hits home with me. I think this is great advice and makes sense.
Paying down debt and saving up the cash will take some time. That is a good thing.

Use the time to thoroughly plan what you want in the remodel/addition before you ever bring in architects and contractors who may try to sell you on their vision If you don't have clear ideas. You will use your money wisely and stay within your budget because it took time to save rather than just grabbing a loan and getting started right away, then borrowing more when it goes over budget.

Also, you mentioned that you have young children now. Their needs will change a lot over the next few years as they become more independent. Since you plan for this to be a long term home, try to envision what your home needs would be when they are teens, needing parking places for cars, room to study, and a place to hang out that gives them some independence and perhaps isn't exactly under your feet.

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DanMahowny
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Re: Home Addition Finance

Post by DanMahowny » Sat Jul 28, 2018 3:28 pm

One wonderful way to tame our tendency to always want more is to persuade ourselves to want the things we already have.
Funding secured

dandinsac
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Re: Home Addition Finance

Post by dandinsac » Sat Jul 28, 2018 4:05 pm

Moving seems quite expensive - probably $50-60K by itself. It seems that if $200K is all it takes for the house to work for you, that seems like the better option. Here's an alternative approach as opposed to waiting:

2018 - Pay off student loan; open a $100K HELOC, hire an architect / kitchen designer to develop plans, get bids. Limit 401K contributions to tax deductible amounts. Don't do any after tax investments. Cut back on travel, expenses, etc. to get at least $15K of extra cash each month to spend on the project.

2019 - Start work, using $15K/month to fund the project, with the HELOC to fill in gaps when needed. Any situations where existing kitchen appliances, light fixtures, etc. can be reused will help as well.

2020 - Pay off the rest of the HELOC, if any is left. Rebuild emergency savings, then resume full investing for retirement.

With stable income and a family who could help in a real emergency, this doesn't seem too risky to me. You'll pay a bit of interest on the HELOC, but it shouldn't be more than a few thousand dollars.

Happy wife, happy life!

ABQ4804
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Re: Home Addition Finance

Post by ABQ4804 » Sat Jul 28, 2018 10:59 pm

Hopefully you can be patient, stay put and pay off the family student loan in the next couple years as others have suggested. During this time, another more attractive house on your dream street may come on the market, and you could just sell and move rather than the hassle of remodel. Someone else will likely buy your place for the same reasons you did. Good luck!

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Wed Aug 01, 2018 10:04 pm

-buzz- wrote:
Sat Jul 28, 2018 3:21 pm
BK121508 wrote:
Fri Jul 27, 2018 4:09 pm

This really hits home with me. I think this is great advice and makes sense.
Paying down debt and saving up the cash will take some time. That is a good thing.

Use the time to thoroughly plan what you want in the remodel/addition before you ever bring in architects and contractors who may try to sell you on their vision If you don't have clear ideas. You will use your money wisely and stay within your budget because it took time to save rather than just grabbing a loan and getting started right away, then borrowing more when it goes over budget.

Also, you mentioned that you have young children now. Their needs will change a lot over the next few years as they become more independent. Since you plan for this to be a long term home, try to envision what your home needs would be when they are teens, needing parking places for cars, room to study, and a place to hang out that gives them some independence and perhaps isn't exactly under your feet.
your advice of seeing the future needs of your kids is much appreciated!

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Wed Aug 01, 2018 10:08 pm

jminv wrote:
Sat Jul 28, 2018 12:59 pm
Payoff the loan from the family member before you do anything to the house. The optics of that would not be great. You can pay it off in 3 months with the cash reserves and current paydown rate, although you did say you want to keep your reserves. You could then remodel it in two years with the extra cash flow.

If you did the remodel and sold tomorrow, you'd more than likely not get your money back. Best not to think that you can raise a price of a home from 675 to 900 with adding an extra bedroom and remodeling the kitchen area, just because no other homes on the street have sold recently for less than 900. I'd be more likely to sell the house as is and buy one that I actually wanted in this situation. It would be the better move. I'd also have her commit to the new place completely as in agreeing that you all would do no work on it after buying it. Maybe this approach would also get her to hold off on the remodeling and stay put for a couple years since it might not look great to the family to buy one year and move the next. This would be good for you financially in the interim.

Although you didn't see it in person, you undoubtedly both looked at it online as well as Facetime, before buying it so you must have had an idea about what it was like in terms of layout. From what you said, it seemed more of an impulse/compromise buy because the price was what you all could afford at the time and it was on the street you liked. Is the reason for this actually because you are now making more reason that she feels she should be able to spend more? This is something to nip in the bud if that's even partly the case because of the importance of compounding from an early age. If this is the case at all, you will do the remodel and end up upgrading to a new place in the future, anyway, so best to just move and avoid sinking money into this.
I've been giving quite a bit of thought to doing what you said with the cash reserves....also in terms of the spending more....contractor came and gave an outrageous number and we both had a good come back down to earth moment and even she said "well I don't feel comfortable ever spending that much money for a house"....of course that's not the end of the story though

BK121508
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Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Wed Aug 01, 2018 10:11 pm

DanMahowny wrote:
Sat Jul 28, 2018 3:28 pm
One wonderful way to tame our tendency to always want more is to persuade ourselves to want the things we already have.
I tried this approach with her, I seem to be failing though.....I think you hit the nail on the head in terms of what it ultimately comes down to: just be happy with what you have because grass is always greener and there is always something more expensive to buy.

BK121508
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Re: Home Addition Finance

Post by BK121508 » Wed Aug 01, 2018 10:21 pm

dandinsac wrote:
Sat Jul 28, 2018 4:05 pm
Moving seems quite expensive - probably $50-60K by itself. It seems that if $200K is all it takes for the house to work for you, that seems like the better option. Here's an alternative approach as opposed to waiting:

2018 - Pay off student loan; open a $100K HELOC, hire an architect / kitchen designer to develop plans, get bids. Limit 401K contributions to tax deductible amounts. Don't do any after tax investments. Cut back on travel, expenses, etc. to get at least $15K of extra cash each month to spend on the project.

2019 - Start work, using $15K/month to fund the project, with the HELOC to fill in gaps when needed. Any situations where existing kitchen appliances, light fixtures, etc. can be reused will help as well.

2020 - Pay off the rest of the HELOC, if any is left. Rebuild emergency savings, then resume full investing for retirement.

With stable income and a family who could help in a real emergency, this doesn't seem too risky to me. You'll pay a bit of interest on the HELOC, but it shouldn't be more than a few thousand dollars.

Happy wife, happy life!
This website is great....I really like how you laid this out with a reasonable and attainable approach. I'll have to learn more about a HELOC.

Ironic and Interesting point you made about the family and emergency fund...backstory is that I declined the offer to allow wife's parents to pay off my large amount of student loans at >6% in exchange for 3% multiple times. Ultimately, my wife pleaded with me to swallow my pride, so I did it and accepted the help. They are very gracious people and I felt spoiled and relatively embarrassed to tell anyone. I've been paying aggressively towards the loan simply because it's a matter of principle to me and putting money towards things like vacation or ah em an addition is selfish and feels like I'm using them. In the end they are such nice and well off people that it makes them feel good to be able to help and wether or not i pay them back doesn't mean anything to them from a pure financial standpoint. I did ask my mother in law if it was ok since I was paying quite aggressively to borrow back in the case of a life threatening emergency for hospital bills or something. Of course difficult question to ask but she said yes. Either way, you can probably tell it's a hard situation for me to swallow and they are fantastic people

BK121508
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Re: Home Addition Finance

Post by BK121508 » Wed Aug 01, 2018 10:30 pm

I really appreciate you guys taking the time to chime in and tell me what I needed to hear. Great community on here.

Ultimately, patience is best. However, my wife really just wants an open layout with a more family feel and not necessarily a more expensive home. I'm glad she realized that a 2-300K addition is simply not in the cards right now if we want to continue to live below our means.

So hopefully we can break even on a sale and buy a home cheap enough that in the end it saves us money. Moving to the suburbs which I'm totally fine with, would give us around 3000 sq ft with 4 beds and great public schools for 500K vs the 675K 2100sq ft 3 bed home that needs serious continual maintenance in the "desirable" city neighborhood. I may post the number crunching I come up with to help you guys figure my break even sale point (given realtor fees, closing costs, etc) and purchase price (given increased mortgage rates) just so we have an idea of how much we are going to lose if we do in fact sell so soon and move again.

masha12
Posts: 47
Joined: Tue Jan 24, 2017 2:34 pm

Re: Home Addition Finance

Post by masha12 » Wed Aug 01, 2018 11:03 pm

We did the whole house remodel. I won't comment on the finances but have a book recommendation. It is called "The Not So Big House" by Sarah Susanka. She did a couple of other books in the series and they are all worth your time if you are thinking about remodeling.

She isn't going to tell you what to do or not to do, she is going to give you things to think about to help you figure out what you really want out of your house. People tend to think they want more square feet when what they really want is space they can use for the use for which they want.

Reading the books really helped us figure out what we really wanted with the home remodel. It is worth it to take the time to live in the house for a while to figure out what you really want in a house.

killjoy2012
Posts: 1025
Joined: Wed Sep 26, 2012 5:30 pm

Re: Home Addition Finance

Post by killjoy2012 » Wed Aug 01, 2018 11:20 pm

You can certainly afford to do the addition/remodel. As a matter of principal, I'd pay back the family member for the student loan before kicking off a $200k renovation though. Also, I wouldn't kid yourself into thinking that a $200k reno is going to add $200k to your home's value. Financially, and logistically speaking, you'd probably be way ahead to just sell the house as-is and go buy another house with the floor plan that makes the wife happy. If you absolutely love that street, then I guess the question is whether you love it $200k worth.

Me? I'd sell and find another house. Overseeing a $200k reno is not a low stress cakewalk itself either.

kaudrey
Posts: 937
Joined: Fri Nov 22, 2013 2:40 pm

Re: Home Addition Finance

Post by kaudrey » Thu Aug 02, 2018 12:41 pm

Pajamas wrote:
Fri Jul 27, 2018 4:22 pm
BK121508 wrote:
Fri Jul 27, 2018 4:13 pm

the lack of open layout and completely segregated rooms is what is making her frustrated and unhappy. we have family over all the time and friends over. it's an awkward layout
I still find it hard to believe that her happiness in life hinges on an open layout in her dwelling.

Given what you said just above, don't make any more hasty decisions regarding your house. They are costly. Take some time to think this through. And leave your mother in law and real estate agent sister in law out of any future decisions.
I don't find it hard to believe at all. As someone who lives in a townhouse with an open concept but a small kitchen who loves to cook and entertain, I understand completely. Although we don't plan to move for a while, I always tell my DH that at the next house, I am going to have a kitchen with enough counter space! A galley kitchen is horrible for entertaining or watching your kids; it makes you feel isolated from everyone else when people are over.

I agree that you should probably pay off the student loan first, but don't disagree with your wife's desires! Good luck!

Frisco Kid
Posts: 350
Joined: Sun Nov 16, 2014 6:18 pm
Location: San Francisco Peninsula

Re: Home Addition Finance

Post by Frisco Kid » Fri Aug 03, 2018 9:26 am

Keyword......wife is rather impatient implying she wants everything now? Things don't work that way.

Remodeling a classic tudor home into something it isn't (open floor plan) to me is just wrong. Betcha once you remodel at great expense she still won't like it plus sounds like she wants it NOW. IMHO you bought the wrong house....sell it and move on. Also may I respectfully add that at your age simply not realistic to know you would live on that street in that town forever. Not saying you won't, just that going forward there are too many unknowns involved to make that call. Lastly, as others have suggested pay off the family loan as you are presently doing. At your income level the future will present many opportunities to you, that's where being patient comes in.

researcher
Posts: 506
Joined: Thu Mar 12, 2015 7:05 pm

Re: Home Addition Finance

Post by researcher » Fri Aug 03, 2018 10:05 am

BK121508 wrote:
Fri Jul 27, 2018 1:15 pm
would prefer to stay on this street and location rest of our life
Moving to the suburbs which I'm totally fine with, would give us around 3000 sq ft with 4 beds and great public schools for 500K vs the 675K 2100sq ft 3 bed home that needs serious continual maintenance in the "desirable" city neighborhood.
So on July 27th, you expressed a desire to stay at your current location for the REST OF YOUR LIFE.

Fast forward ONE WEEK, are you are "totally fine" with moving to the burbs to get rid of your smaller home that "needs serious continual maintenance."

You two are all over the place. I can't imagine what scenario you'll find yourself in a year from now.
Hopefully your "impatient" wife won't "really just want" the next new/fancy/trendy/expensive thing to fill whatever void is "making her frustrated and unhappy."

Dottie57
Posts: 3980
Joined: Thu May 19, 2016 5:43 pm

Re: Home Addition Finance

Post by Dottie57 » Fri Aug 03, 2018 10:10 am

Pajamas wrote:
Fri Jul 27, 2018 4:22 pm
BK121508 wrote:
Fri Jul 27, 2018 4:13 pm

the lack of open layout and completely segregated rooms is what is making her frustrated and unhappy. we have family over all the time and friends over. it's an awkward layout
I still find it hard to believe that her happiness in life hinges on an open layout in her dwelling.

Given what you said just above, don't make any more hasty decisions regarding your house. They are costly. Take some time to think this through. And leave your mother in law and real estate agent sister in law out of any future decisions.
Your wife has a great life if the layout is truly making her unhappy. I can see a remodel as a want but not a need.

il0kin
Posts: 124
Joined: Mon Feb 26, 2018 8:19 pm

Re: Home Addition Finance

Post by il0kin » Fri Aug 03, 2018 10:11 am

A little bit of relationship advice, and different scenarios, but my wife wanted to have a 2nd child fairly quickly after our first one (he is now 3 and we are having the second in a few months). We went back and forth on it a bit because I didn't feel comfortable with the debt we had at the time and doubling our daycare expenses. So, we sat down and made a plan, paid off my truck and our loan for HVAC in about 12 months, and had a minimum acceptable date to start trying for #2. This helped immensely because we came to an agreement, had a plan and a start date. We are now almost debt free (just a few thousand left on her car) besides our mortgage and will not have to worry about coming up with the money for the 2nd daycare payment, and I am very glad about that. Sounds like you need to make a plan, stick to it and put a framework in place that she agrees to.

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 8:55 pm

researcher wrote:
Fri Aug 03, 2018 10:05 am
BK121508 wrote:
Fri Jul 27, 2018 1:15 pm
would prefer to stay on this street and location rest of our life
Moving to the suburbs which I'm totally fine with, would give us around 3000 sq ft with 4 beds and great public schools for 500K vs the 675K 2100sq ft 3 bed home that needs serious continual maintenance in the "desirable" city neighborhood.
So on July 27th, you expressed a desire to stay at your current location for the REST OF YOUR LIFE.

Fast forward ONE WEEK, are you are "totally fine" with moving to the burbs to get rid of your smaller home that "needs serious continual maintenance."

You two are all over the place. I can't imagine what scenario you'll find yourself in a year from now.
Hopefully your "impatient" wife won't "really just want" the next new/fancy/trendy/expensive thing to fill whatever void is "making her frustrated and unhappy."
i stand corrected but

what's wrong with wanting to stay in this location for the rest of my life, but being "totally fine" moving to the burbs? i'm fine with either because in the end they are both great options. i do feel all over the place and struggling to decide what's right
Last edited by BK121508 on Thu Aug 09, 2018 9:01 pm, edited 1 time in total.

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 8:58 pm

Dottie57 wrote:
Fri Aug 03, 2018 10:10 am
Pajamas wrote:
Fri Jul 27, 2018 4:22 pm
BK121508 wrote:
Fri Jul 27, 2018 4:13 pm

the lack of open layout and completely segregated rooms is what is making her frustrated and unhappy. we have family over all the time and friends over. it's an awkward layout
I still find it hard to believe that her happiness in life hinges on an open layout in her dwelling.

Given what you said just above, don't make any more hasty decisions regarding your house. They are costly. Take some time to think this through. And leave your mother in law and real estate agent sister in law out of any future decisions.
Your wife has a great life if the layout is truly making her unhappy. I can see a remodel as a want but not a need.
it's completely a want and not a need at all. I 100% agree and am struggling and have made bad decisions in the past as you have pointed out, which is why I figured I'd post on here. I really do need to just sit on this decision for a while like you said. Just feel like it's too much, too soon.

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 9:16 pm

AlphaPilot wrote:
Fri Jul 27, 2018 3:33 pm
Just thinking outside the box here. $200k for a two room addition on a 675k home seems asinine. Especially when it's "opening up" something such as the current kitchen. I assume for $200k you are adding on a good chunk to the house which includes foundation work, framing, siding, windows, and of course more roof. $200k is more than I spent on my entire house build and that was materials to build 1200sq/ft + 900sq ft garage. I realize markets are vastly different, but wow!
"$200k for a two room addition on a 675k home seems asinine"
- can't say I totally disagree, but to me it seems asinine because I don't need to spend that much on a house. 675 already sounds asinine to me


"I assume for $200k you are adding on a good chunk to the house which includes foundation work, framing, siding, windows, and of course more roof."
- taking out back of home which is brick, reconfiguration of some of the knob and tube sub panel, reworking some of the radiators, foundation work, two stories matching brick with slate tile roof and windows creating new master bath, walk in closet, closet for extra bedroom, large new kitchen, conversion of old kitchen to mudroom/laundry and rec room / office.
- seems like alot of work to me, but honestly I really don't know

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 9:18 pm

delamer wrote:
Fri Jul 27, 2018 3:40 pm
AlphaPilot wrote:
Fri Jul 27, 2018 3:33 pm
Just thinking outside the box here. $200k for a two room addition on a 675k home seems asinine. Especially when it's "opening up" something such as the current kitchen. I assume for $200k you are adding on a good chunk to the house which includes foundation work, framing, siding, windows, and of course more roof. $200k is more than I spent on my entire house build and that was materials to build 1200sq/ft + 900sq ft garage. I realize markets are vastly different, but wow!
I don’t see the problem; we gutted the kitchen and added square footage at a cost of about 20% of our house value. And also in a neighborhood where our house was the least expensive home, like the OP. OP’s percentage is a bit higher, but not outrageous.
this is exactly what i was wondering. it's quite a bit of money and a high percentage of our house value, but the street/neighborhood is very desirable with way more expensive homes around us

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 9:22 pm

masha12 wrote:
Wed Aug 01, 2018 11:03 pm
We did the whole house remodel. I won't comment on the finances but have a book recommendation. It is called "The Not So Big House" by Sarah Susanka. She did a couple of other books in the series and they are all worth your time if you are thinking about remodeling.

She isn't going to tell you what to do or not to do, she is going to give you things to think about to help you figure out what you really want out of your house. People tend to think they want more square feet when what they really want is space they can use for the use for which they want.

Reading the books really helped us figure out what we really wanted with the home remodel. It is worth it to take the time to live in the house for a while to figure out what you really want in a house.
this is really great, thank you. i'm going to look this up. obviously i'm struggling and waffling back and forth every day, but one thing my wife and I did agree on is that we just want a place with usable space.

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 9:25 pm

killjoy2012 wrote:
Wed Aug 01, 2018 11:20 pm
You can certainly afford to do the addition/remodel. As a matter of principal, I'd pay back the family member for the student loan before kicking off a $200k renovation though. Also, I wouldn't kid yourself into thinking that a $200k reno is going to add $200k to your home's value. Financially, and logistically speaking, you'd probably be way ahead to just sell the house as-is and go buy another house with the floor plan that makes the wife happy. If you absolutely love that street, then I guess the question is whether you love it $200k worth.

Me? I'd sell and find another house. Overseeing a $200k reno is not a low stress cakewalk itself either.
I like your perspective and advice thank you.

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 9:27 pm

kaudrey wrote:
Thu Aug 02, 2018 12:41 pm
Pajamas wrote:
Fri Jul 27, 2018 4:22 pm
BK121508 wrote:
Fri Jul 27, 2018 4:13 pm

the lack of open layout and completely segregated rooms is what is making her frustrated and unhappy. we have family over all the time and friends over. it's an awkward layout
I still find it hard to believe that her happiness in life hinges on an open layout in her dwelling.

Given what you said just above, don't make any more hasty decisions regarding your house. They are costly. Take some time to think this through. And leave your mother in law and real estate agent sister in law out of any future decisions.
I don't find it hard to believe at all. As someone who lives in a townhouse with an open concept but a small kitchen who loves to cook and entertain, I understand completely. Although we don't plan to move for a while, I always tell my DH that at the next house, I am going to have a kitchen with enough counter space! A galley kitchen is horrible for entertaining or watching your kids; it makes you feel isolated from everyone else when people are over.

I agree that you should probably pay off the student loan first, but don't disagree with your wife's desires! Good luck!
you hit the nail on the head in terms of her feelings. she said the exact same thing "isolated" when cooking and brought up the points of watching the little ones while still cooking. I think ultimately we just need to have patience

BK121508
Posts: 21
Joined: Fri Jul 27, 2018 12:49 pm

Re: Home Addition Finance

Post by BK121508 » Thu Aug 09, 2018 9:31 pm

il0kin wrote:
Fri Aug 03, 2018 10:11 am
A little bit of relationship advice, and different scenarios, but my wife wanted to have a 2nd child fairly quickly after our first one (he is now 3 and we are having the second in a few months). We went back and forth on it a bit because I didn't feel comfortable with the debt we had at the time and doubling our daycare expenses. So, we sat down and made a plan, paid off my truck and our loan for HVAC in about 12 months, and had a minimum acceptable date to start trying for #2. This helped immensely because we came to an agreement, had a plan and a start date. We are now almost debt free (just a few thousand left on her car) besides our mortgage and will not have to worry about coming up with the money for the 2nd daycare payment, and I am very glad about that. Sounds like you need to make a plan, stick to it and put a framework in place that she agrees to.
I think this is a great idea. I think that's part of our problem, we have no plan. We need to have a plan, stay the course, be patient, and then enjoy once we achieve our goal.

Sagefemme
Posts: 45
Joined: Mon Mar 12, 2018 9:31 pm

Re: Home Addition Finance

Post by Sagefemme » Thu Aug 09, 2018 9:41 pm

I am curious about living on your dream street. I understand the house itself is not great, but is living on The Street in The Neighborhood as wonderful as you imagined it would be? I am a big believer in the right location being key to happiness. I remember reading a study once where the researchers questioned a large number of urban dwellers about their life happiness and satisfaction. One of the biggest determinants of life satisfaction was commute time. The longer people spent commuting the less satisfied with life they were. Will this be a factor if you leave the great location you're in now? The study also pointed out that it wasn't just distance or commute time between home and work that was important. It was the distances between/among where you live, where you work, and where you shop, that made for significant impact on happiness. Just a thought to muddy the waters further!

il0kin
Posts: 124
Joined: Mon Feb 26, 2018 8:19 pm

Re: Home Addition Finance

Post by il0kin » Fri Aug 10, 2018 8:26 am

BK121508 wrote:
Thu Aug 09, 2018 9:31 pm
il0kin wrote:
Fri Aug 03, 2018 10:11 am
A little bit of relationship advice, and different scenarios, but my wife wanted to have a 2nd child fairly quickly after our first one (he is now 3 and we are having the second in a few months). We went back and forth on it a bit because I didn't feel comfortable with the debt we had at the time and doubling our daycare expenses. So, we sat down and made a plan, paid off my truck and our loan for HVAC in about 12 months, and had a minimum acceptable date to start trying for #2. This helped immensely because we came to an agreement, had a plan and a start date. We are now almost debt free (just a few thousand left on her car) besides our mortgage and will not have to worry about coming up with the money for the 2nd daycare payment, and I am very glad about that. Sounds like you need to make a plan, stick to it and put a framework in place that she agrees to.
I think this is a great idea. I think that's part of our problem, we have no plan. We need to have a plan, stay the course, be patient, and then enjoy once we achieve our goal.
Sounds like the Boglehead thing to do!!

The Plan helps you feel like you're doing something and making progress, even though it will take some time. Each month after our expenses were covered, we'd look at how much extra cash we had and decide how much extra to put towards our debts. We finished The Plan about 4 months ahead of schedule, thanks to two 3 paycheck months (June and December) where we could shovel the whole amount right into the debt. Funny how money seems to materialize and make itself available when you have a goal you really want to accomplish :wink:

I think you know this, but before doing home renovations or purchasing another home, you should really pay off your student loan debt, both for financial security as well as the negative perception it might create to do a large and expensive remodel while owing family money. Explain that you want your in-laws to view you as a responsible and careful guardian of your family finances, and that you want them to know their daughter made a wise choice by choosing someone who lives within their means, even if it isn't always sexy. Sometimes the emotional appeal is stronger than the financial appeal.

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