A friend of mine just went through the same thing. They opted for the 203K loan so they can renovate the home and add additional bedrooms and baths. The appraisal for the future value came back lower than they had anticipated but all worked out in the end.
Gina Chirico, Sales Associate
Home Equity Line of Credit or a Home Equity Loan is based on the amount of equity you have in the home. If you want to do renovations you might want to look into refinacing the home with a 203K loan. If you need 25K worth of upgrades you can roll that amount into your new mortgage and then YES the appraiser will use the worth (Value) of the home after the work is done.
It's a nice program... and Home Equity Loans are hard to come by right now.