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I think it's highly possible that this house in the dream is one you lived in during a PL and your subconscious is using it to represent your soul right now, because, as daisy said, houses usually represent our soul or 'inner self' in a dream. It may be using it because of a common issue that you had in both that life & are having in this one.
Have you been working on making changes in your life? Are you trying to change how you view things? That kind of thing would explain you trying to modernize the house. As for the frightening area of the house....yes, that's probably representative of something you need to deal with. Something you've been avoiding at all costs, but until you get that area taken care of first, you won't be able to finish 'modernizing' the rest of the house.
Does any of that help you?
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