I wasn't completely forced to wait, but we did scrap plans to do an extension and then remodel. We just saved over 3 years and paid cash as we went along to do each area as we could. Of course, we had the luxury of living elsewhere while we were remodeling. I'm totally thrilled we stayed within the existing footprint and didn't take on debt. The house will be paid off in 4 more years and we will be completely debt free. My home also lost 50% value. I decided not to sell it and we are renting that home out.

well saving is a good thing!
it's so nuts that last december my home appraised for a hundred thousand more than it did this summer!
i think we'll be here for a very long time, since dh is happy here and it is a dream location. he's been ill for years, so i'm happy to stay here where he's happy.
but darn, i want this DONE already!

Ask for a copy of the appraisal and see what comps they used. If you know an appraiser or real estate agent they can help you challenge the appraisal.
I just did that on ours and am waiting for word. Our house appraised for $90k 13 months prior to this appraisal, however, we added on and renovated extensively in the meantime. There is no way our market came down $90k in one year (approx 18% drop) not even counting getting bigger and going from shabby to mostly new.
The appraisal got our room count wrong, square footage of the house and of the property wrong and missed counting a bathroom. The comps they used were wholly inappropriate except for one, but even that one was not adjusted for properly.
You can appeal, so don't just accept the appraisal as is.

I have been dreaming of my new kitchen for 6 years! For the past 2 1/2 years, I did the planning and researching. And now, I am finishing it up. For me, I have been purchasing parts of the kitchen over that time and storing them in the basement (cabs, faucets, rev-a shelf items, etc.). That has allowed me to buy a bit at a time so that I didn't take on debt. I also took some classes to learn how to do things, so that when the time came, I would know what I was doing (granted this was a complete DIY kitchen......).

Luckily I have a job that allows me to work extra for overtime pay. That has helped with buying the bigger items for the remodel, so I worked my butt off prior to taking a vacation to do my DIY kitchen. I know a lot of folks don't have that option, but selling things on e-bay is a way to go as well.

I also cut corners by buying things on e-bay, craigslist, clearance warehouses, etc. I realize this doesn't work for people not doing a DIY kitchen, but it does help tremendously with saving money.

My main goal was to have a lovely, functioning kitchen without taking out a heloc in this volatile market, and I was able to do that. So, yes, you can do this, providing you are willing to wait, save and cut corners. Oh, and my kitchen has some pretty nice elements in it- you'd never guess it was pieced together bit by bit like I did!

I agree with dianlo - get a copy of the appraisal. Many times there are glaring errors. I just refuted one yesterday and waiting to hear back. Only one comp sold in the last year (no turnover in that neighborhood) and they're using houses under agreement. This is for a rental refi and prices are determined block by block.

On another appraisal (for our home) the appraiser listed only 50% of the land, missed 9 fireplaces plus a few more rooms! I've almost never had an accurate appraisal. I can't believe paying $500+ for something that is so wrong. What a scam! A huge pet peeve of mine.

On the flip side we waited and waited for our renovation. We were hoping to start our reno after living in the house for 5 years but it took another 5 years before we had enough money saved up. I did a cheap kitchen reno because I couldn't live in THAT kitchen for more than a year. (very few uppers, red counters, white counters, frig by itself sticking out in the middle of the room, no DW...) $2K in 1999 got us HD low end cabs, new sink, faucet, new formica counters and a DW plus a better layout. It made the wait manageable.

Yes, appraisors make mistakes...but have there been many homes selling in your area? If there are just a few and they take a big price cut to unload it...that has a devastating effect on the rest of the homes in the area. An appraisor may have had to go outside your area to get comps, if homes in your area aren't selling. This can skew your home's value, too.

I don't know what area of the country you are in, but hopefully a few homes will sell this summer for a slightly better price (maybe with sellers that are not as desperate) and then get your appraisal and financing as quickly as you can.

Personally, I would recommend waiting and saving to do the renovation. Even if you can get your appraisal revised, do you really want to go into more debt in this economy?

We did not have quite the same circumstances as you, but we did wait (for three years). We did not want to buy or build until we could do so with cash we had on hand. There were times I thought my husband was a little crazy, but we have a house that we built from cash, and our old home that we sold will now be cash in the bank. It was hard, being patient, but in the end knowing that we have what we can afford it priceless. I think there are still quite a few indications the economy may still worsen, so I would hold tight and know that it will be even that more exciting when it happens.

But, in the meantime, can you do a few small things that would make you feel excited about the space?

i also vote for saving and doing a bit at a time. i planned for 1 yr and construction has been going on for 6 months. this approach allowed me to pay for almost the entire kitchen project out of pocket vs taking out of savings. think squirrel hiding nuts... was so happy every time i scored on a good buy and it went in the pile in the garage. i am so happy i did not have to pull lots from savings in this economy and no additional debt load. this house may become a rental in time due to slumping house values and the house will be easier to rent now that it is updated and i enjoy it in the meantime!

If you really want to do the kitchen as soon as possible AND if there are other sources of money, you should consider tapping that. Some may say it is wise and some may say that it is foolish.

Otheerwise, like everyone said, you should wait, save money and pay as you go.

I am old enough to know that before the 1980s, there was no such thing as refinancing or equity line of credit for most middle class folks.... Pretend that we are in the pre 1980s banking world. You would have had to save the money for a kitchen remodel!

I think there are two questions. If you feel your appraisal is wrong, I would challenge it. Even if you don't want to take on more debt. You paid for the appraisal? It should be correct. You certainly deserve a full copy of the comps.

It is a separate question whether you should borrow on any additional equity a new appraisal might find.

We don't know their situation.
In our case, we bought a house well below what we could afford because we figured we would renovate to make it our way. We saved for 5 years in order to extend/renovate. There is no issue about qualifying for the loan based on income or credit, the only roadblock we hit was the appraisal. Last year, the banks were reluctant to lend so we found one that let us go to 90% LTV to get the cash to do the work. We knew it would be worth more after it was done and be well above 20% equity since we were making it larger as well as nicer and our area supports it. We are on a 15 year mtg, so are paying down quicker.

The new appraisal is ridiculous in our case. The appraiser made many factual errors as well as errors of judgement. The banks are making record profits yet lending is down 10% this year. The appraiser was sloppy and overly cautious about the value. Houses within .2 miles from our house in a less expensive direction but new and bigger just sold for $200k more than what we need from our appraisal. My neighbors' houses all sold for much higher than the value they came up with and our house is newly renovated vs. nicely updated. If I were not in the business as a real estate agent, it would have been demoralizing to think our house is worth so little. Luckily, I knew better and had access to an appraiser who agreed with me and helped coach me in the rebuttal.

We could have waited another 10 years to pay cash for it, but then our kids would be almost grown and we'd have missed those years of enjoying it. I don't think we can blanket say that no one should finance work on their house. If no one does any work other than for cash, then our economy will tank even further. I have faith that the housing market will rebound in the future and we will have had the pleasure of using our house and its value will be there. We may not profit from it, but since our selling timeline is many years off, we can wait to find out.