You love your house, but you need more room. You want a new house, but you love your neighbors. Your house has charm, but it needs a new look. You want to move into a different house, but wish you could take your yard with you. These are the dilemmas that motivate homeowners into making an important choice — do you buy a new home, or renovate your current home to meet your needs.
A wise real estate agent will tell you it is all about location. This plays a big factor in the new-versus-renovate question. If you adore your neighborhood and have qualms about leaving behind cherished neighbors, amenities and the feeling that this place is home, then renovation may be the wiser choice. Better yet, if your current house sits in a trendy neighborhood where real estate prices are on the uptick, a renovation can be a smart financial move, too. Ask for cost estimates for the remodel project and then determine the fair market value of the completed project. If the new sale price outweighs the cost of the renovations, the decision may be a no-brainer.
The recipes for buying a new home or renovating a current one share a common ingredient. They both require money and financing. A new house means qualifying for a new mortgage. If you recently changed jobs, have incurred substantial debt or anticipate other big ticket purchases coming your way, the timing may not be right for a mortgage application. If you have a decent amount of equity built up in your current house, you may be able to swing a home equity loan to pay for renovations. Keep in mind that a home equity loan will also incur closing costs such as appraisals, title insurance and credit reports. Buying a new home, and selling your current home, also means real estate commissions, seller closing costs and the expenses involved in moving your belongings from one location to another.
Additional room is very often the motivating factor for wanting a new house. Renovating an existing house offers two options for expanded space — up or out. Adding a second story onto a one-story home may be a viable plan, but two extremely important factors need consideration. First, you need to know if the home's foundation can support the additional weight or will it require reinforcement. The second consideration is whether local zoning code allows you to build up. Building out will increase house square footage, but eats away acreage in the yard. If you choose to add on to your current house, be sure you have ample yard space and that the plans are within required setbacks or right-of-ways.
Finances, location and the brick-and-mortar that make up a house are all tangible pieces of the decision-making puzzle. However, intangible factors can also tip the scales when balancing the pros and cons of whether to buy a new house or renovate. A renovation is a long, arduous process that demands patience and flexibility. Living under far from stellar conditions can fray the last nerve after a few months of flying dust, the constant sound of power tools and a bevy of contractors walking through your home. On the other hand, if the thought of packing up and leaving the cozy comforts of your current home gives you uncontrollable willies, the discomforts of a renovation may pale in comparison. Know what you personally can and can't tolerate before putting the for sale sign in the front yard.
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