Buy New or Remodel the Old?

Many of you are faced with these difficult questions about your own house right now. As time goes by the needs of your family change and suddenly your home isn’t as perfect as it once was. Maybe you are on the other side of the fence and you still love your home, but you really want an extra bedroom or an upgraded kitchen. Is it time to start looking for a new house that better fits your needs, or should you remodel?

This will be a choice that will require a significant amount of time and money, so it’s important that to take your time and weigh the options. You’ll want to consider the financial impact, but also the emotional impact on your family. Start by asking some of these financial questions.

Buying New:

    o How much will it cost to purchase a new home that meets your families’ needs? o If you are moving to a new city what will be the added costs of living in a more expensive area? o How much will you be able to sell your existing home for? o How much will it cost you to move all of your belongings from one house to the other, plus added furnishings for the new house? o If you move to a larger home how much will your everyday utilities like electricity, gas, and water increase? o How much more will your property taxes go up?

To get accurate estimates on these numbers be sure to work with a local Real Estate Agent.

Remodeling:

    o What would you like to do and how much will it likely cost? A licensed contractor should be able to assist you with estimating these costs. o How much value will these improvements add to your home? A licensed real estate appraiser can assist you in estimating which improvements will have the biggest bang for your buck. o Will remodeling project displace you temporarily out of your house? Will you have to rent? o If you are remodeling your kitchen how long will you be dining out with the family each night?

It’s also important to consider the emotional impact of these decisions. Start by thinking of these emotional questions.

Move:

If you answer “Yes” or positively to these questions then a move is likely your plan.

    o If you move to a new neighborhood, would your children be able to attend better schools? o Would a move help you reduce your work commute? o If you move would your new neighborhood be an improvement from your current neighborhood? o Would you be able to find a house in your price range that has everything you are looking for?

Remodel:

If you answer “Yes” or positively to these questions then a remodel will likely keep you happy.

    o Do you love your neighborhood, the schools, and your neighbors? o Would your home be perfect if you could just change a couple things? o Would it be difficult to remove your kids from one school and place them in another school where they don’t have friends yet?

Use these questions as a way to get started, but there can be countless more you can come up with. The more you ask, the more likely you are to feel fully informed once you make your decision. Sit down with your family (kids included) and discuss what you’re thinking. Including the kids will help you to understand how important this decision is to them. Create a list of Pros and Cons to see what holds the most importance.

Consider taking the family on a field trip to visit open houses. This will give everyone a realistic picture of what kind of homes are available to replace your existing home.

Now it’s time to make some conclusions. What are your answers and your gut telling you? If you still are unsure, then maybe you need to dig a little deeper? Pull the family together again and discuss your options. Expand on your Pros and Cons list.

If your choice is to move, consult a local Real Estate Agent to give you tips on easy low-cost improvements that you can make to your existing home to make it more appealing. Experts agree that the kitchen and bathrooms add the most value to your home, so pay particular attention to these areas so you can sell your home faster.

If your choice is to remodel, consult a licensed contractor. It’s always a good idea to check with your city to make sure your contractor is properly licensed and carries the appropriate insurance. Your contractor should be able to help you craft a clear idea of what you want to accomplish before starting any work. Changing directions during a project can be very expensive.

Regardless of your decision it’s important that you have the proper financing in place. If you decide to purchase a new home, a professional mortgage consultant will help you to determine how much new home you can afford. Your mortgage consultant can also play a critical role in assisting you with getting your current home sold by properly financing the buyer of your home. This is a critical step that many homeowners forget. If a potential buyer cannot get qualified to buy your home, you may lose your new dream home.

If you decide to remodel it would still be a good idea to consult with a mortgage consultant. Together you should be able to evaluate whether you have enough cash on hand to complete the job, or whether you need to pull cash-out of your equity to complete the job.