Is It Better To Remodel Or Buy Bigger? Here’s How To Decide.
Your family is growing and you’re running out of space for the little ones to sleep and play, while still allowing you room to keep your sanity. Or perhaps you need more room to house your hobbies and your spouse’s woodworking projects. No matter the cause, if it feels as though your home is about to burst at the seams, it may be time to upsize. When your home no longer fits your needs, you have two options: renovate your current home orpurchase a bigger home. Which is the right decision for you? Here are some factors to consider as you make your decision.
Evaluate the Benefits of a Remodel — Generally speaking, a remodel project is less expensive than buying a bigger home. If you can set a budget and stick to it, it’s likely more beneficial for your current finances to do the remodel rather than relocate. Additionally, if you like your current neighborhood, are in a good school district and are close to the amenities you enjoy, then making the choice to deal with the inconvenience of a remodel is probably worth it in the long run.
Think About the Advantages of Moving — Sometimes we just need a fresh start and buying a new home is always exciting. Finding a move-in-ready home that fits your family’s lifestyle and needs may be easier than knocking down walls in your current home, attempting to make a square peg fit into a round hole. For most people, moving to a new home is simply less of a hassle than living through a remodel, which may even require that you find temporary housing while the work is completed.
Look at What You Can Do with a Remodel — Does your community have restrictions on how big a home can be in relation to its plot of land? In many cases, homes are already built to the allowed dimensions. If this is the case, adding on to your home’s existing footprint may not be an option.
Consider the Value of Your Land — The value of land tends to appreciate more than the value of a home. That being said, if you live on a larger plot of land, the substantial tax savings may be worth it to stay on your current property and do the remodel than to move to a new home where the taxable value may increase compared to your existing home.
Estimate the Resale Value of the Remodel — If you’re leaning towards an addition or remodel project, in addition to getting an estimate for the work, take a look at how much value all that work would add to your home’s resale value. How does it compare to the cost of other homes in your neighborhood? Consider the ebbs and flows of the housing market as well. You may find that you simply won’t get your investment back, and if that’s the case, you may also find it difficult to get a bank loan to do the work. On the other hand, if the remodel work will bring your home up to or slightly above neighborhood standards, you almost can’t go wrong with a remodel.
Consider the Costs of Moving — When you buy a new home, don’t forget to take all the expenses into account. Not only are you making a down payment, but you must also consider financing charges, real estate commissions, moving costs, utility deposits, increased taxes and other expenses that might pile up during the transition. With the exception of your down payment, those are expenses that have no return, and you could easily write checks totaling $30,000 to $40,000 during a move from one house to another. In a remodel, that money goes right back into your home, and you will (hopefully) see a return on your investment one day.
Think Outside Your Current Area — The price of convenience is often steep. The further a house is from the city, the less expensive it will be (in most cases). If you need more space but are on a tight budget, consider moving to the outskirts of town, where land and houses tend to cost less. Of course, there are other costs to consider as well, such as the extra expense for gas and car maintenance to cover a longer commute. Living in the suburbs works well for some families, but it isn’t necessarily the best option for everyone.
Make the Decision That’s Best in the LongRun — While you’re trying to suit your family’s current needs, it’s important to look into the future and consider which option is best for your family over time. Will simply adding more bedrooms or an extra bathroom accommodate your family’s long-term needs, or is it just a temporary fix?
Whether you make the decision to stay put and remodel your home to fit your needs, or decide the best option is to relocate to a new home, there are significant financial commitments to be made. No matter which option you choose, PrimeLending is here to help. Contact a PrimeLending home loan expert today who will help you secure the right loan for your renovation project or relocation.
from the PrimeLending blog by Mandy Jordan