Rain is pouring outside your kitchen window and your spouse is doing work from the office on a makeshift desk, wedged between the door and the counter. As you wash vegetables for dinner, you splash the papers, resulting in loud grumbling. Seconds later, a noisy crash echoes from down the hall, followed quickly by a baby''s cries. Your 3-year-old comes running from the bedroom he shares with the baby, explaining he woke her up when he dropped some toys. With a sigh, you realize something must be done about the size of your once-dream home--and quickly.

Most homeowners, at some time, are faced with the prospect of leaving what they considered to be a perfect house, or remodeling to suit new situations, such as a growing family. There are many factors to look at if you need to make this decision; the most worrisome may be your financial picture.

Depending on the length of time you''ve been in your house, the equity invested there versus the cost of adding on what you have outgrown may make moving a losing idea. According to George East, a real estate broker in Monterey, "you''ve got to consider the tax aspect." Because of Prop. 13, there may be increased taxes on your improved property. Or, if you decide to move to a bigger house, you''ll probably be paying more taxes. Before setting out to do either, you must take a serious look both at your finances and at what you need more of. Can you afford to add a bathroom, for $11,000 on average? Or do you need more space all around, requiring an upgrade to a four-bedroom house, with family room and living room? According to Remodeling magazine, the larger the project, the more efficient it is to move.

But there isn''t just a yes or no answer for every person. Why do you need more space? Are you expecting twins, or is Aunt Hilda only moving in temporarily? Is crime increasing in your neighborhood and you want out before someone is shot? Maybe you just got a big promotion and you''ve always wanted to live in a Tudor mansion with a hot-tub. On the other hand, remodeling may be the way to go if you love your location and the cost of the project will be less than the value it adds to your resale possibility. Remodeling recently released its "Cost vs. Value Report" for 1997-98, and it found that a minor kitchen remodel, of around $8,000, would recover 102 percent of its cost in a resale. "Minor" in their eyes meant replacing cabinet doors, countertops, sink, floor and oven and repainting. Jackie Busby, a Realtor in Seaside, says the most popular additions in Monterey are also common to the United States. "Most people will improve a kitchen first, then add a bath or bedroom," she says. "If you have a three-bedroom house with one bathroom, it''s outdated. If they want to add on for comfort, it will be a family room."

The cost vs. value of additions or remodels are based on resale one to two years later. The report says the values may increase more if the house is held for longer; most buyers don''t want a "handyman''s special" any more. A complete bathroom addition will recoup about 92 percent of its cost when the house is sold. And even with the ''90s trend of telecommuting, a new home office is on the low-value end of the list, worth only 69 percent to customize an existing room with cabinets and wiring.

The mantra of the real estate world, "Location, location, location," is equally important in your decision to move up or out. "Location is key is deciding the value of moving vs. remodeling" says a Pacific Grove Realtor who asked to remain anonymous, "Research your location, see what''s sold in your area. Is your area increasing in value? Then check out the zoning laws, places are different in what you can build. That will help you compare costs." If you do decide to add on, don''t overbuild for your neighborhood. Eventually, you may want to sell and you will not be able to get your money back in the deal. "Some people try to build a Pebble Beach home in Seaside," says the Realtor, "It''s very hard to sell if you''re overbuilt." Watch other houses in your neighborhood. They will be a gauge to measure if your house will become too large with a remodel and unbalance the area''s property values.

When considering a move, "an older home in a good location is better," says Jan Williams, a Realtor in Pebble Beach. "A small home in a good neighborhood will sell quicker than a big house in a fair location. Three-hundred-thousand dollars is generally the low-end in a good area."

You may have your decision made for you by your current neighborhood "if crime is increasing or bad renters are moving in," says Busby, "then it makes more sense to move on. Of course, if people around you are building, values will probably increase there and it would be better to stay and add on yourself. Seventy-five percent of the time, the neighborhood sells the house."

Another thing to consider, closely related to both remodeling and selling a house, is the eventual resale after you''ve added on. "Most people don''t think of that, most want to please themselves," says Williams "Sometimes if you don''t work with a designer, you get an awkward floor plan that''s hard to sell. When you add a bedroom, where will it attach? Does the space flow well? People see potential, not what''s already there. Vanilla sells. Don''t use trendy styles or loud colors."

Some homeowners and real estate experts find several unique situations on the Monterey Peninsula. In terms of adding a bathroom or updating your kitchen, you may run into hot water, or lack of water to be exact. "The water situation here is a big concern," says Bob Winkleblack, a contractor in Seaside. "The water management in Monterey County measures things in fixture units, not people per house. I guess it''s easier to police." Fixtures include toilets, sinks and faucets and they will be inspected thoroughly. "Because of the paperwork, the permit and planning fees, some people can''t afford it. That''s actually a plus for people to buy a home, not build on to one."

The limited water supply in this area leads to strict controls on building and additions, but the zoning and review processes are also very stringent, according to Winkleblack. "Every change you plan to make on your home has to be reviewed and approved by a local architecture review board." The detailed inspections and permit applications can take months, depending on the size of your remodel and how organized you are with your plan. "They check that things will conform to the neighborhood; especially on the coast, they want things to blend in naturally. I''d say it''s one of the strictest areas in California."

Your decision to add a bedroom so your toddler won''t wake the baby, or to move entirely so you''ll have an actual home office for office work, in the end is based on individual needs, money, the size of your project and what will add the most value to your life and your house. cw

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