I will be adding rooms and doing home improvements however; should i use 401k since???i've had this for many years and will be the first time??? how does this go?

Never ever use 401K money to do things that is not urgent such as paying medical bills, avoid bankruptcy, etc. Not a good idea.

if you use your 401k you will have to pay a penalty and also they take the taxes out from what u already have in it

You're much better off getting a home equity loan (or home equity line of credit) from a bank or credit union. The others are right, don't use your 401k for this.