Some day we'll look back on this and laugh, and that day is today

Winning first prize in the chucklehead category, one real-estate appraiser who somehow failed to notice that looming behind and just off to the right of our house is a bigass garage. Like 14'9" tall and with interior space of 742 square feet. This garage is so large and so noticeable that when we run into people in the neighborhood whom we don't know well and we start explaining where on the block we live, they nod their heads knowingly and say, "Ah, you're the people with The Garage." Yeah, it's hard to miss. But the first-rate appraiser hired by the credit union to assess our property value marked the form thusly:

Garage or carport: None

Wow. You'd almost have to stab yourself in the eye and stick your head in a bucket to pass by our house and overlook the garage.



(And here's a shot from the backyard, with the garage to the left and the house in front of you.)


But instead of increasing our home's value on paper by adding in the worth of our beloved Garage Mahal, said appraiser/chucklehead subtracted thousands of dollars from the estimate because one of the comps has a 1-car attached garage and he thought our house had none.
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Ken begged me to let him be the one who gets to call the loan officer tomorrow and point out the mistake. I love him too much to deny him that bit of joy in his life. But how much do I wish I could trail him to work and lurk outside his office while he makes that phone call? Maybe I should make him record it for quality assurance because I am going to be in agony until I hear how it went down.

Of course, we'd already reconfigured our money-borrowing plan to fit the unexpected strictures their initial appraisal had landed on us, but with this new piece of information--the presence of a garage that's half the size of our house--we're guessing they could bump up the appraised value of our home just a tad. All the better for us since we'd like to stay in the sweet spot of having the lowest possible interest rate on the new loan.

While Ken is at work tomorrow having all sorts of fun at the credit union's expense, I'll be taking a personal day to keep purging our house of unwanted items and reorganizing the possessions that earn the right to remain. It's not fun exactly; I wouldn't use that word. But I definitely feel productive when I tackle a room, chuck a third of its contents, and box up another third for an upcoming yard sale (not ours; a friend of mine has generously offered to have our stuff plopped on her lawn in a couple weekends).

In fact, with the progress I've made to this point, the house feels bigger already. Almost as spacious as that garage out back.

The Drive-by Appraisal

We supplied our credit union with all that fun paperwork prior to the April 19th deadline and have been (im)patiently waiting ever since for them to conduct their title search and do an appraisal to back up our layperson's estimate of what our house and property are worth.

Today we got our answer. Let's do a little math, shall we? A realtor friend of ours estimated the market value of our home as X. To be conservative, we estimated our home's value at 10% less than X. The lender's appraiser calculated the value at 24% less than X. There is a big difference of opinion there, wouldn't you say? Of course, the only one that matters is the official appraiser's because he or she was hired by the credit union and that's the data they care about.

We've requested the appraiser's report, which should arrive by mail tomorrow or Monday, so we can see exactly what elements of the home and property were taken into account--what were the positive features? what were the detractors? We know our house is not perfect by any means, or we wouldn't want to remodel it, would we? But the .76X value that came back from the appraiser is the approximate sale prices of a home around the corner that had to be gutted when the new owners bought it a year ago. Our house is a bit cluttered (OK, a lot cluttered), and the dog's toenails have dug little paths into the hardwood floors in spots, but it doesn't exactly need to be gutted or we wouldn't be living here.

So we'll see what the report says and go from there. If they won't budge on their appraisal value, we'll reconfigure our project to fit the new financial situation, but it'd sure be nice to just be able to tackle the whole shebang and get it over with. I'm glad this drive-by wasn't of the shooting variety, but it sure was shocking nonetheless.

Quick question

So we applied to the credit union for a home equity loan, and soon we will apply to the township for our construction permits. But to whom do we apply for the time and energy to get this project underway and done while holding down full-time jobs and being full-time parents?

This feels familiar

Tonight Ken and I pulled together our paperwork for the home equity loan as it is due back to the credit union by Monday. (Never fear: We are mailing it to a Philly address from within Philly tomorrow. It will get there Friday, if not actually tomorrow.)

The amount of paperwork is necessary, but it is still a bit staggering. Thank goodness we're better organized about our finances than we are about the rest of our possessions that are strewn randomly about the house. Though, to be honest, the deed to our house was being stored for some crazy reason on the top shelf of our coat closet. (Major kudos to Ken for remembering it was there. I would've sworn it was in my old rolltop desk in the boys' room.) I'm having flashbacks now to the closing on the original mortgage and my horrible trepidation leading up to it. Thankfully we went through with it because soon afterward the housing bubble hit, and if we hadn't bought when we had, we might only be shopping for a house right now.

But back to this fun process. Paystubs, check. W2s from 2009, check. Proof of homeowners' insurance in sufficient quantity, check. Aforementioned deed, check. Copies of our drivers' licenses, check. Promise to sign over the first-born child of our first-born child should we default on this loan and he/she not be able to spell Rumplestiltskin, check. Err, OK, not that last one. But I think I did accidentally include the kitchen sink in the envelope. We'll be getting a new one, anyway, and I just wanted to be sure all bases were covered.

So that's all taken care of, and next we wait to see if they need any more info, and otherwise we'll schedule the closing and put this stressful part of the project behind us so we can move on to other stressful parts.

Meanwhile, Ken is out in the garage continuing to fine-tune the organizing and purging that he and his dad did in massive amounts this past weekend. I won't show "before" pictures, but soon we'll have some "afters." I'm very impressed with the radical change, I can tell you. And once there's some open space out there we'll start filling it with all the plastic tubs and cardboard boxes that I've been dutifully packing up from the living room, dining room, and kitchen so they can be safely out of the way of the dust and debris.

One foot in front of the other....

Money, money, money

Disclaimer: I feel weird talking about money in a public forum (I even do in private forums, with rare exception), but it's an integral part of this whole remodeling process, so I'll just keep it vague enough that no really personal info about our finances comes out.

Anyway, we ditched the idea of the mortgage refi. Our current mortgage payment is super cheap and has a fixed rate of 5.26% until it's paid off in a maximum of 24 years. Better not to mess with it.

I spoke to the credit union loan officer this morning and told her we'd rather do a home equity loan. Ken and I did briefly discuss a home equity line of credit last night, but we'd rather have a set loan payment and not open a revolving credit account. Just personal preference, really. There are pros and cons to both types of financing, and we chose the one we're more comfortable with.

So our home equity loan got conditionally approved within the hour (yay for PFFCU!), and we'll be getting the paperwork in the mail within 3-5 business days. Meanwhile they'll check comps in our neighborhood to make sure we didn't overestimate our home's value. As long as the comps bear that out, the loan amount we requested goes through. If they play it more conservatively, no big deal. We take less money and adjust our home improvements to meet our new budget.

I really hate taking on a debt, but the rates are good these days and we'll be spending a fraction of what it would cost to have a contractor do the same work. And if you've seen Ken's garage in person, you know he doesn't build junk. He may fill it with junk, but he doesn't build junk. Just kidding, sweetie! Couldn't resist taking a jab atcha.

Boxes

About a week ago I realized that just purging the house of things we don't really use or need was not going to be enough. I need to completely pack up the first floor of our house as if we were planning to move out. Because for several months we really will not be able to use the living room, dining room, and kitchen in the manner that we do now.

Luckily, I can get those fantastically solid and consistently shaped Hammermill paper boxes from work. I've been doing a loop through the office every afternoon around 3:30 to see if there are any empties or near-empties that I can snag and take home with me. My goal is to pack roughly two boxes per night. That is, boxes of things we plan on keeping. Purging is still a whole other job until itself.

Thank goodness I get the weekend Inquirer. I have no time to read it, but I pull out the coupon flyers and stack the papers by the fireplace. All winter long they made for good kindling; now they're being put to use as packing material.

My first plan of attack involves the china cabinet since, let's be honest, a family with two kids under 6 years of age does not use china. Next will be the living room bookcase. The bottom shelf of kids' books will have to be incorporated into the bookshelf in the boys' shared bedroom. The rest will be summarily purged or packed as necessary. If you've been dying to find a 2001 Writer's Market or Kaplan's 2003 GMAT study guide (with CD-ROM!), I've got you covered.

Where we'll put the boxes once they're packed is really up to Ken. My thought process ends when a given box is sealed. Attic? Garage? Who knows? I'm thinking of starting an over/under pool on how many boxes we end up having after all of this. I think we're gonna give the Great Wall of China a run for its money.

As the head spins

I talked to our mortgage refi agent today, and my head is swimming with numbers. Turns out that, while it may be cheaper in the long run to refi, it may be less stressful to just get a home equity loan.

What we preferred was a 20-year fixed-rate mortgage with $X cash out to do the remodeling work. Turns out that the credit union uses Fannie Mae for mortgage refis that are longer than 15-year terms, and the closing costs would be $5-$7K as opposed to $1K with a 10- or 15-year mortgage that the credit union handles in-house. Obviously, higher closing costs, while they can be rolled into the loan, result in less $ we can put toward the remodeling work. We have decent equity in our house but can't crack the 80% loan-to-value (LTV) barrier because the interest rates worsen at that magical mark. No point in refi'ing to a higher rate, right?

While I would really love to pay off our mortgage before I turn 50, accelerating our payoff from our current 24-years-left mortgage to a 20-year mortgage was going to be considerably less painful than the option of condensing all of this moola into a 15-year mortgage. And, as we expected, they insist on us having an escrow account (taxes only; not homeowners' insurance) until the LTV drops below 70%. Depending on how much cash out we would take from the refi and how much our house is worth according to them, that would take 1-3 years.

Lucky for us we have a great neighbor who is a real-estate agent, so she pulled comps for us, and we might have underestimated our home's worth on our initial refi application. Turns out Ken's massive garage might actually be considered an improvement on our property after all, and we do have a cozy fireplace and wet bar. The downside is we have one pitiful bathroom, but that's partly what this project is meant to correct as there is no way I'm going to raise two boys through their teenaged years in a house with one bathroom shared by all four of us. I shudder at the very thought.

We'll have to crunch the numbers tonight and see what we rises to the top as the best option. Although the interest rates on their home equity loans are roughly 2% higher than the mortgage rates, we would have an 85% loan-to-value cap (a bit more breathing room before the rates would crap out), and we wouldn't have to worry about adding an escrow account to the mix like we would with their refi program. I like the financial fluidity of managing our own tax payments.

I had hoped the financing decision would be pretty straightforward, but I'm the one who muddied the waters in the first place by suggesting we refi, rather than take a loan. Time to put that option back on the table and parse it out. Likewise, we could consider a home equity line of credit, though I need to know more about those before I'd jump in.

The good news is that we are one step closer and so much more educated about financing options. Padraic asks me every day whether we're going to make our house bigger yet, but he's got a little more waiting to do. I think I'll keep him busy by putting him to work on packing up the living room. The bookcase has his name all over it, and he already loves boxes.