In some states, there is a mandatory minimum for bedrooms. In my state, that is 100 sq ft, though houses older than when that minimum went into effect are grandfathered in. I am not sure how that would affect a "remodeled" home.

I think you need to be careful about expecting to get "all you put into it" in appraisal on the refinance. That is HIGHLY unlikely, even if you do it all DIY, but especially if you are moving from 3bed to 2 bed homes. You need to see if there are any other 2 bed homes in your local area, and see what they sell for. That will give you an idea to what kind of "hit" you'll take by removing the wall.

I don't think you can do a curtain wall/removable wall.

You *could* maybe put up a temporary wall, finish it all nice so it looks good, get your appraisal, then remove it. But, that is sort of cheating the system.

You need to plan on a master addition if you want a master suite. Doing what you plan will greatly adversely affect the value and appeal of the home. An addition will add value, though not as much value as it will cost to add.

I sometimes chuckle at folks who insist resale value trumps all.

If you are going to live in the house for 30 years, do it like you want it.

Wife and I bought an older house that had a low sale value(repossed to start) because it has tiny bedrooms and too many walls(no open concept).

We like it enough to not care. It is our Retire/Expire house. The last time I leave will hopefully be in a body bag.

You do need to check with the local zoning and codes office about the proposal. Here in Kansas City, taxes are based partially on the number of bedrooms---as an indicator of the number of people living in the structure.

And get an estimate of the change in value(if any) for the credit union.

In my state, a room can not be counted as a bedroom unless it has a window as well as a closet. Make sure you check into that as well. Also, typically, appraisers only take off around $2,000 (give or take) for a bedroom. For example, If 2 houses are identical in every way in regards to location, square footage, number of baths, condition, etc, but one has 4 bedrooms and one has 3, then the appraiser will adjust the price by approx 2K. Again, please keep in mind that this is an approx. number and I can only vouch for my area. (I've been a realtor for 10 years so I've seen this often). Appraisers in your area may do things very differently. You could also look up several appraisal companies. Call one of them and speak directly to one of their appraisers. Explain your situation and ask how much value they would deduct from your house if it only had 2 bedrooms. They will probably give you a lot of helpful info. Good luck!

I'm a little confused. Would not the house be appraised before you buy it? When it is still a three bedroom? After that do what you want. If this is your retirement home then why would you care what it would sell for in the future? Sorry if I'm making assumptions but at that point would you not either be in a care facility or have passed on?

You said yourself these homes are typically sold to elderly who would love the changes you would make.

I'm a little confused. Would not the house be appraised before you buy it? When it is still a three bedroom? After that do what you want. If this is your retirement home then why would you care what it would sell for in the future? Sorry if I'm making assumptions but at that point would you not either be in a care facility or have passed on?

You said yourself these homes are typically sold to elderly who would love the changes you would make.

You're worried about what the house will appraise for 30 years from now when you may well no longer know or care what happens to it? Really??

The changes you propose will make the house more valuable to a lot of people, not just you. Make yourself a nice place to live and enjoy it. If the side effect is lower real estate taxes for the next 30 years enjoy that too!

Taking a home from a 3 to a 2 bedroom is a significant bigger hit than 2K almost anywhere in the country. A 2K hit might be applicable if the home was under 50K in an economically depressed area. Any place else, you're looking at a much bigger chunk of change. Here, in a low cost area, that would average around 30K.

The bank who issues the mortgage on a 3 bedroom house does so based on the value of a 3 bedroom. Altering it to decrease the value while they still hold the mortgage would be frowned on. It would be the same if you wanted to demolish part of the house. They could call the mortgage due if they desired to do so.

I'm not sure I understand the problem WRT the appraisal.

The house is appraised before you buy it - certainly before you do anything to it. You get as much cash out as you can with the appraisal you get. This is what you have available for the remodel.

The house won't be appraised again until you sell or refinance. Are you thinking that you will refinance after the renovations are complete? That seems like an expensive proposition - you'll be paying closing costs twice in a relatively short time.

Is the house currently a 3Bed 1Bath?

If so, making it into a 2/2 with a master bath would likely increase the value of the home. A bathroom costs more to build than a bedroom, whether you are adding new construction or remodelling within an existing space.

I think 2 bathrooms is a necessity. I'd rather give up a spare place to sleep and have a spare bathroom.

Plain and simple: this isn't the house for you if you have to try to do some workaround to make it work and have to worry about if the bank will approve of your plans. Buy another house.

I'm curious what the property tax ramifications might be. Can you ask your assessor if your house can re-assessed (lowered) if it's two bedrooms only?

A 3bdrm 1400sqft house is not necessarily worth less than a 2bdrm 1400sqft house.

But 30 years? Just do what you want to do. When you (or your heirs) sell it, selling price will be more accurately calculated by price per square foot than by how many bedrooms it has.

A 3 BR 1400 sq ft home sounds like tiny bedrooms anyway. 30 years from now, there will be someone who would appreciate the larger bedrooms, even if there is only 2 of them.
I know several empty nesters who have wanted to do the same thing so they could have a really large home office or craft/sewing room!

It seems that you expect the renovation spending would increase your house value dollar to dollar (100%), so that you could fold the expense into new mortgage when you refinance. is it realistic?