4. Is expanding a good investment?
Any time you consider making home improvements, ask yourself whether it’s a wise investment. In some cases, building onto an existing home can be a smart financial move. If you live in an area with great schools, camps, and amenities for children, adding more square footage could prove quite rewarding when the time eventually comes to sell your home, as you’re likely to attract families. On the other hand, if you live in a neighborhood that attracts primarily older residents looking to downsize, a larger home may be tough to unload at a premium.
Keep in mind, too, that expanding your home could let you use it as a source of rental income. Even if remodeling your home doesn’t boost its sale price, you could still come out ahead financially.
Either way, before you sink money into a home addition, figure out whether you're likely to see a good return on investment. If not, you may be better off buying a larger place elsewhere.
5. How will expanding impact your ongoing homeownership costs?
Paying for a home doesn’t just mean covering the mortgage. You’ll also need to pay property taxes, homeowners insurance, and maintenance costs. And the more space you gain, the more these additional expenses are likely to rise.
Granted, buying a larger home could result in similarly increased costs, but in that case, you’ll have the option to shop around and perhaps buy a home in a town with a lower property tax rate or a newer home that requires less upkeep.
In other words, moving could prove less expensive than remodeling in the long run.
6. Are you in a good position to apply for a mortgage?
Buying a new home means applying for a mortgage all over again. And if your credit score recently took a turn for the worse, or your income dropped from its previous level, that could prove problematic.
On the other hand, if you have plenty of home equity to work with in your current place, you can tap it to pay for renovations.
Expanding your existing home gives you the benefit of more space without having to uproot your life, while moving gives you a fresh start and the chance to enjoy additional amenities you may not get if you stay put.
Ultimately, there are pros and cons to both decisions. If you’re not sure whether to remodel or move, contemplate the above questions to arrive at the most logistically and financially sound choice.