Savings vs. Home Renovation

[Val Williams]

I'm 26 years old and my husband is 28. We currently have about $75k in savings. 

We own a 3 bedroom home in northern NJ that we took around a 385k mortgage for. 

I'm fantasizing about the idea of a renovation to our home. This hypothetical renovation would add a den to our first floor, and upstairs would add 1 bedroom (making it a 4 bedroom home), and enlarge one bedroom (creating more of an obvious "master" bedroom).

 This renovation would probably cost about 70-80k. 

Our mortgage is already pretty big for us, and I wouldn't be comfortable taking all of that out in a loan. 

So my question. How much should we have in savings? Would it be a bad idea to do something like spend 35-40k from our savings and take a loan for the other 35-40k?

Also, I know that this renovation would increase the value of our home, but I'm not sure how much relative to the cost of the renovation.

Any thoughts on this, pros and cons, are greatly appreciated. Thank you.