Buying your first house is one of the best things that can happen to you. However, a time might come when you feel the need for an upgrade either because it no longer meets your needs or because you want something different/newer. Well, whatever your reason may be, two options face you: move or renovate?
Recent data suggests that homeowners prefer to renovate their current homes rather than move due to low home inventory. However, everyone’s home, budget, priorities, and real estate market is different, and you must consider all of these. By following the five key steps below, you should be able to decide on renovating or moving:
CHECK FOR THE FINANCIAL IMPLICATION
The COVID-19 pandemic has grossly affected life as we know it, and the ripple effects of the pandemic have hit even the real estate market. Before making up your mind on what to do, you need to understand each choice’s financial implications so that you don’t drown in debt. Here’s where we describe the costs of moving/renovating so that you can make informed decisions. Let’s start with the cost of moving.
COSTS OF MOVING
Moving would require you to sell your home, except you are super rich and can afford to maintain more than one home at once. After sorting that, there are other hidden costs(besides the cost of buying the new home) you also have to handle before moving.
There are agent commissions to be paid before you can sell your house, so be prepared for those, except you intend to work with a discount broker. After selling your old home, moving to the new one will also incur some costs whether you get professional movers or take the DIY route. After moving to your new home, expect to do some repairs. The extent of repairs depends on how well the last occupant handled the house. Regardless of the extent of repairs, they will come at a cost. Depending on the home you move to, you might pay more for maintenance and utilities.
COSTS OF RENOVATING
Renovation costs are a lot more straightforward as you get a specific estimate for what you want to be done to know what you are up against. The caveat is that you have to align your budget with your financing, in addition to paying attention to market trends (more on that later).
That said, you will have to pay for a permit when you need to do certain kinds of renovations that include structural changes. If you need a permit for your renovations, you might also need to submit the architectural plans to the local authorities, which comes at a cost. Besides the costs for labor and materials used, you might need to get temporary accommodation while your home is renovated.
FINANCING OPTIONS AVAILABLE TO YOU WHEN RENOVATING
Given the country’s economic situation, the odds are that you would require some financial support to execute your plans. After ascertaining the costs involved, knowing what financing options are available to you should help you decide what is feasible and what isn’t. Here are some financing options you could exploit:
Refinancing: With this form of financing, your existing mortgage is replaced with a new one for the same balance at a lower rate. However, it is wholly dependent on your current interest rate.
Cash-out refinancing: Once you have equity built up in your house, you can replace your current mortgage with a new home loan for more than you owe on your house. You get the difference in cash, and you get to spend it on your other financial needs.
HELOC: HELOC is short for Home Equity Line of Credit. It is a line of credit that is tied to the equity in your home. You get to pay interest on the amount you use.
Home equity loan: This financing option is like a second mortgage that you take out on your home.
Personal loans/savings: You can also finance your decision to renovate or move by taking personal loans from banks, online lenders, and credit unions. You could also take advantage of credit card promotional offers. If your savings are large enough, you might dip your hands into the till. That way, you eliminate the pressure that comes with financing debts.
KNOW WHAT WORKS FOR YOU
You are probably undecided about moving or renovating your home because you have not taken the time to consider what works best for you. Also, you must take a look at national trends. For example, inventory on housing shows no sign of going up any time soon, so many homeowners have opted to renovate instead of moving.
On the flip side, certain areas of the country have experienced an increase in homes’ prices. And so, some homeowners have been able to rake in handsome profits to each, his own. What works for the Joneses might not work for you, so you need to decide what works for you.
STUDY THE MARKET
If you did not do this before, now is the time to do so. The pandemic shook a lot of things up on the real estate market, so you need to know what the market trends are at the moment. How much does it cost to get a new home in your desired location? How marketable is your current home, and how much can you make from selling it? You might need to consult with a real estate agent to get solid advice.
EVALUATE YOUR EMOTIONAL ATTACHMENT TO YOUR COMMUNITY
We are all social animals, and our connections with people tend to influence us. Are you willing to leave the connections you built over the years? How will your kids cope with leaving their friends and all? How far do you need to commute to work from your new home? These are but a few more personal reasons that should be considered when deciding between moving and renovating.
HOW MUCH TIME DO YOU HAVE ON YOUR HANDS?
Like most things in life, time is essential when you are looking to renovate or move.
Let’s say, for instance, that you intend to move; you’d need to factor in the timeline for putting it up for sale, getting an offer that works for you, getting a new home and moving into it. On the flip side, renovating your home is another ball game entirely because a lot of times, several unexpected issues might arise in the course of remodelling your home.
So before you make up your mind on whether to move or renovate, please take a look at how much time it will require to remodel your home against going through the process of moving. That will help you to arrive at the option that works for you.
So should you renovate or move? Well, it all depends on you and your peculiar situation. Be realistic when coming to a decision. Renovating your home will not suddenly fix problems like nosy neighbours and the type of home. What is the ROI for renovating your home? Is it cost-effective to renovate your home given your current financial (and otherwise) condition?
There is such a thing as over-improving your home, and you need to consider the implications. Why renovate your current house when you can buy something else that is better suited to your desires?
If you read to this point in the article, you know a thing or two about what either decision entails. Use what you have learned in this article to arrive at a decision that works for you.