The impending holidays bring about a lot of feelings: nostalgia, excitement, joy. But if I’m going to tell you the whole truth, those feelings have always been coupled with anxiety, stress, and the feeling that the walls are closing in on me. Eventually all of the carefully placed decorations start to bother me. Covering every surface (sometimes I go a bit overboard), they make my house feel smaller. There never seems to be enough room for all the stuff. And since paring down is just not an option (not a realistic option anyway), it adds to the stress of the season.
Last year, we were blessed with another holiday surprise: news of our third child. Joyous news? Most definitely. But one that made my husband and I take a look at our crowded home and consider our options.
We were out of space.
One of our options was to sell our quaint Long Island home in exchange for a bigger one. We hemmed and hawed, because although that seemed like a reasonable option, I knew that the housing market had steadied since we’d bought our home ten years ago and that any profit we made would be rolled right into a new mortgage that we might not have been able to afford. Besides, it had taken me ten years to get the house the way I liked it: the paint colors, the moldings, the furniture that perfectly fit the contour of our living space. Not to mention the holiday decorations. We’d been laying down roots with our first two children – they’d made friends on the block, and so had we. Neighbors who are there with an extra cup of sugar (or wine) when you need it are hard to find.
Another option was to refinance our home. With interest rates dropping so low, we could take out a new mortgage at more favorable interest rates. We could also take out a sizable chunk of money that had grown in equity to dormer the house and add an extra bedroom. It turns out, however, that when we looked into it, we discovered that the bulk of our monthly payments had gone toward the interest of our loan and not the principal. So we hadn’t paid down the mortgage as much as I’d thought.
The loan officer that we’d used to buy our home suggested another option: a 203k loan. This is a construction loan that takes into account the projected increase in the value of your home for the project that you complete – before you do it. So the dormer and extra bedroom would raise the price our house could appraise for after it was all finished. This seemed like the most win-win situation for us.
Our neighbors were thrilled that we decided to stick around. And that our extension brought the housing value of the whole street up.
