We started a DIY remodel and so far have turned a 4 bedroom/2.5 bath into a one bedroom/1 bath. Have been told that the house can not be appraised now. Bought house for $432K and have a 1st and 2nd for the about amount. Interest only loans (1st 342K at 5.5% expires next year, 2nd $85K equity loan at about 4% now, variable rate). Comparable houses (that is when we have a functioning house) in the neighborhood are selling for $475K - $800K; typical is between $525-$575. To give you idea of land value, the $800K was scraped and rebuilt. Monthly combined gross income, $8,600 plus annual bonus $10K. Other credit card debt of $10K. Have completed, signed structural drawing, construction plans, and three competitive bids to do work that range from $80K - $120K.

We have made several attempts to refinance as well as tried to get a get construction loans. Looking for any other suggestions to get out of this mess. We can live in an unfinished home, but I would hate missing this opportunity to get our loan restructured into something fixed and longer term.

Thanks for the suggestions in advance - Kolorado

Unfortunately what you have done hasn't increased the value and you really don't have any equity in the home now and most certainly won't with the additional funds going toward more remodeling.  What if you turn it back into a 3 or 4 bedroom 2 1/2 home?  What would that do to the value with the 80 - 120k remodel costs?  You need to spend a few dollars with a knowledgeable appraiser to find out what needs to be done to maximize the value of the home.  It appears that continuing down the path you are on to create something that you like isn't going to happen, so consider other options and before you take action to make certain that it all pencils out.