If you do refinance, the lender will not be able to use the appraisal you have had done. Since all of the issues in the mortgage industry in recent years most lenders do not personally select an appraiser. Many just use a rotating list of approved appraisers so that there are not any questions of the appraisal being "fudged" as may have been done in the past.

Appraisals have really become an "arms length" type thing for lenders.

If you are fine with paying for two appraisals, then go for it.

Is the loft "staged" like a bedroom and/or used as one?

I think an appraisal is a waste of your money. Appraisals differ depending on if done for refinancing or just because you wanna know. And they're not cheap, nor carry any weight. Only the one specifically ordered for your re-fi matters.

A bedroom here needs:
To be fully enclosed.
At least one window.
Built in closet.
At least either 9x9 or 10x10... I forget.
Must be accessable w/o having to go through another bedroom.

Having 4 bedrooms as opposed to 3 bedrooms does not necessarily add profitability, maybe just a bit more marketability.

Check with your building dept. Codes determine what is a bedroom. . Los Angeles county does. Also it could raise taxes. We enclosed an area, but called it a family room because of this.

You should check with your towns building department. In my area, you can't simply just add a bedroom. The septic system has to be designed for however many bedrooms are in the house.

Thanks, I checked the building code and I don't think it counts as a bedroom.

The key concept in the code is that it needs to be enclosed, which would be easy enough to do if we had to, but then there are rules about close proximity to a bathroom and the only bathroom on the floor is the master bath and you have to go through the master bedroom to get to the master bath. I don't think that would fit the rules.

I think it would be considered a bonus room or a den.

I'm still debating about the appraisal. I can get a independent appraisal done for $200. The bank that currently holds our first mortgage charges $475 for the appraisal for a refinance. I don't want to pay that much to be told that the property hasn't rebounded enough. It may be worth it to me to pay $200 for an opinion on the current value.

Before paying for an appraisal, why not invite a few real estate agents over? Won't cost you anything, and they're pretty knowledgeable about current value, what's selling, what's not, what you might do to up the appeal, etc. And all the ones I've spoken to are willing (make that ANXIOUS) to sit down and talk--knowing that a good impression now, may get them a listing later.

But start there, then see if you want to drop a couple of hundred $$$ for an actual appraisal.