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Time for a Change? How to Decide Whether You Should Renovate or Buy New

Time for a Change? How to Decide Whether You Should Renovate or Buy New

A young family of three has just learned they’ll soon be a family of four. An astute businessman has been working hard and has received a lofty promotion… and a raise. A couple has just dropped their daughter off to college and they are getting ready to retire. It may seem that these three have nothing in common, but there are a multitude of reasons that force homeowners into deciding whether it is time to buy a new home or renovate their existing place.

Of course, just as varied as those reasons are the reasons for reaching that final decision… renovate or buy new. Before you decide, here are five things to consider:


Location, Location, Location


Before you decide to “fly the coop” and buy a new home, think about how you will feel leaving your current neighborhood and neighbors. If part of your home’s charm (for you) is the area that surrounds it, renovating may be your best option.

While you’re thinking about your current home’s location, consider its proximity to what else matters most to you. You know… your work, your children’s school, the gym, etc. Would you be able to buy a new home that is as close or possibly closer?

Finally, if your home is located in a trendy neighborhood, where home prices are on the rise or the homes that surround yours are valued slightly higher than yours currently is, making renovations may be a valuable decision, particularly if you are planning to list your home in the future.


Money Matters


When you’re buying a new home, it is very easy to know exactly how much you will be paying… sale prices are clearly listed. When you make the choice to renovate, it is not quite as easy to calculate. Yes, you can set a renovation budget, but remodeling costs can easily exceed that budget, especially if you decide to add any last-minute upgrades or if you run into any construction issues along the way.

If you sell your current home and move into a new one, don’t forget to account for the costs of that move, including closing costs when you sell and buy. You can also compare the costs of renovating and the costs of buying a new home by calculating the cost per square footage in both homes.

Unless you’re planning to pay cash for a new home, you’re automatically going to have a new mortgage. If you’ve made large purchases, changed jobs or had any other recent issues that may affect your credit, renovating may be your best bet. But, remember, a renovation may mean borrowing against your home’s equity. Would it be better for you to take on a new mortgage or pay your current mortgage plus a renovation loan?


May We See Some I.D.?


When it comes to renovating a home, age is more than a number.. or at least it can be. If your current home is older, you may need to make sure that the foundation and yard can handle a renovation. Will you be able to build up or out?

It may also be harder to maintain current building codes when you’re trying to renovate an older home. That should not deter you, but should encourage you to do your homework before you decide what is best for you.


Beware of the Rise and Fall


An uncertain housing market can only add to the confusion when you’re deciding whether to renovate your home or buy a new one. Interest rates alone can either deter you or sway your decision to shop around for a new home.

However, a rising economy can increase your home’s equity, encouraging you to take out that home equity line and renovate to increase the value even more. But remember, a rising economy can also increase construction costs. Don’t forget to check around.


It’s All About You!


The final thing to take into consideration when you’re deciding whether you should renovate your home or buy a new one is YOU! Renovations can be stressful and they can be long. Can you live “under construction” for however long the renovation takes? On the other hand, can you leave the place you and your family have been calling “home”?

If you’re still having a hard time deciding whether you should renovate your current home or buy a new one, read more information here: