If you've outgrown your home or your needs are changing in some other way, it’s not easy to decide whether you should remodel or move. Maybe your home no longer fits your family’s needs, or it could be showing signs of age. A home renovation might fix the problem, but so could putting your house up for sale and finding another one.
This article dives into that debate and how the housing market plays a role in that decision.
Get To Know Your Local Market
Before selling and moving, always research the current real estate market relative to your area. Start by comparing your home’s value with recent sales in your neighborhood — if neighboring homes are worth more, a remodel could bring the value of your property in line with others. This could be worth spending the time and money and in the long run, it’s a good investment.
Don’t forget to check for any restrictions your local community has on making changes to your home. If you’re part of a homeowners association, ask a board member to provide your neighborhood’s home-improvement guidelines. However, if you need more space but there are restrictions on adding square footage to your home, then selling and buying a bigger home will probably be the better choice.
Once you’re up to speed with the most current information, you can accurately compare the expenses and benefits of moving versus remodeling, i.e. the costs of an addition or renovation.
Think Through Emotional Benefits
Are you happy with your neighborhood but not with your home? If so, you might consider upgrading your home and staying put. Being comfortable with your surrounding community is a major benefit that can’t be replaced when moving elsewhere.
The reverse is also valid. Maybe you’re not happy with your home’s location, or with other aspects a remodel can’t fix — it makes sense to sell and find another property. As a homeowner, you’ll want to carefully weigh the choice between moving and remodeling. Taking the time to carefully process the emotional effects of either option, you can confidently make the best decision.
Estimate Home-Renovation Costs
One of the most significant considerations when moving and remodeling is determining the most cost-effective option. At first, moving may seem more manageable and less expensive than redesigning and renovating a home but hidden costs can quickly add up. It’s crucial to consider moving and packing expenses, realtor commissions and closing costs, as well as the expense of a new mortgage and any home repairs.
When it comes to renovating, the expenses may be less than you’d think. Renovation costs are usually determined by the project’s size and the materials selected. Keep this in mind as most homeowners often think they can only fix their homes by making large additions and renovations.
However, the root cause of your home frustrations may be easily solved with a few easy tweaks. You might find it beneficial to consult with an interior designer or architect who can help plan cost-effective design solutions and save on project expenses.
Using A Cash-Out Refinance For Home Improvements
We’ve covered the importance of estimating renovation costs, but you’ll also need to decide how to pay for one. Homeowners often fund their projects for home improvements with a cash-out refinance or a home equity loan.
When you choose a cash-out refinance, you refinance your current mortgage for more than you owe and take the difference in cash. Remember this rule of thumb: the higher the equity is in your home, the more money you can convert to cash.
A nice benefit of refinancing is the possibility of lowering your interest rate and reducing the overall cost of the loan. This helps you save a significant amount of money over time without increasing your mortgage payment.
Using a Home Equity Loan or Line-of-Credit For Home Improvements
A home equity loan allows you to use your home as collateral and borrow against its value to pay for the remodel. Borrowing against the equity your home has built can cost less and is more efficient than taking out a new home mortgage.
Since home equity loans come with a fixed interest rate, your monthly payments are always the same, and it’s never a surprise when it comes to your overall monthly budget. The amount borrowed is usually determined by taking a percentage of the appraised value of your home, less your first mortgage balance.
Whether You Remodel or Move, Finance With Best Reward!
It’s not easy to decide whether you should remodel or move. But if you’re asking the question, chances are you’ll be better off making some kind of change.
Either option will affect your wallet. At Best Reward, you can easily apply with us online for a Home Equity Loan or Line-of-Credit to get your renovation project up and running. Or if you decide to take the cash-out refinancing route, we offer competitive interest rates, an easy online application, and the excellent service you know and love.
Learn More About Home Equity Loans Learn More About Cash-Out Refinancing Learn More About Home Equity Lines-of-Credit