To build onto, or to start from scratch?

**thrifty gal** · 02-19-2005, 06:15 PM

My dh and I live in a very TINY house-700 square feet. We have 1 bedroom (upstairs), living room, kitchen (EXTREMELY SMALL-can't even get a table in it), and a bathroom. We owe $15k on this little house. We bought this home with good intentions of building onto it. Now, that we are almost ready to get things done, we are being told that it would be cheaper for us to tear this house down, and start from scratch on a new one. I don't understand how this could be with what we owe on the house. Anyone have any idea??

BTW, the only things we are doing at the moment, is making the living room bigger, the kitchen bigger, and building on another bedroom.

Also, what type of loan do we need to get for this job?? How does all that work? TIA!

**PrairieRose** · 02-20-2005, 01:56 PM

Jennifer I'm no expert on real estate but my best suggestion would be to decide how much you are willing to spend to add on. Then I'd call a real estate agent and get some opinions about what the value of your home would be if you did this regarding surrounding homes, area, etc... . I'd also ask her to show you some homes in the same price range. You might be much better off to sell this house and for the same money you would have been into it for, buy a bigger home. And that home might even be worth more (the bigger one) than the smaller home, built onto would have been.

As far as the type of loan..... I would check into a home improvement loan as well as the possibility of a temporary home improvement loan converted to a refinance of the existing mortage + home improvement loan or just do a refinance all together once the project is completed.
*edited to add*
Be very wary of home equity loans. They can actually cause you to lose your home if you are not able to pay for some unforseen reason.

Unless you are very tied to the property for some reason, really consider if you'll get your money back out of it if you have to or want to sell in the future.

Hope this helped a little bit. As always, it's covered by my nickel's worrth of free advice money back guarantee

**Florence** · 03-03-2005, 09:22 AM

I think that some consideration should be given to how much space you will be adding. If you are just planning to add a single room, then tearing down is not necessary. OTOH, if you are planning to double or triple your space then a tear down & build from scratch is more reasonable. Also, you should consider the age and condition of the present house.