When you're unhappy with certain aspects of your home, you may find yourself contemplating whether to buy new or renovate your existing space. There are pros and cons to both options, so let's dig in.
The benefit of renovating and staying put
Renovating can be a hassle -- but so can moving, and perhaps even more so. When you buy a new house, you’re signing up to pack up your existing home and move to a new one. And there are consequences to doing so.
For one thing, living in a new neighborhood can be less convenient -- you don’t know your way around, the stores aren’t the same, and the adjustment is potentially lengthy. Moving also means giving up the neighbors you like and the school district your children are enrolled in. That’s a big deal.
Another good reason to renovate? You'll have a home that caters to your specific needs. Say you're unhappy with your outdated kitchen and want a new one. You could find a home with a brand new kitchen, but you may not love the color of the cabinetry. When you stay in your home and renovate, you call the shots with regard to improvements.
Furthermore, you may find that renovating is more cost-effective than moving. When you sell a home, you need to pay a real estate agent a commission for facilitating the sale. Then, when you move, you need to cover the cost of moving, plus pay closing costs on your new mortgage. Renovating, meanwhile, can be done quite affordably if you have equity in your home, because that opens the door to a home equity loan or line of credit that gives you access to the money you need to make those improvements.
Also, the right renovations to your existing house could give you a great return on investment so that when the time comes to sell it, you’re able to command top dollar for it while getting to enjoy those updates yourself in the meantime. And, in some situations, renovating could make it possible to turn your home into an income source. If you finish a basement, for example, there could be the option to rent it out to a tenant.
The benefit of buying new
On the other hand, there are plenty of good reasons to buy a new home rather than renovate. First, you’ll avoid the annoyance of having to live in a construction zone for a period of time. You’ll also get out of dealing with the logistics of renovating, from securing permits to reading up on building code requirements.
Furthermore, if the cost of your renovation is substantial, you may find that moving to a new home actually makes more financial sense. Though you will need to apply for a new mortgage, interest rates are relatively low right now, and if your credit is strong, there’s a good chance you’ll score an affordable mortgage.
Finally, moving to a new home gives you a chance to enjoy different amenities that may not be available in your neighborhood. And if you find an area with a superior school system, you may find that moving is actually a positive thing for your children.
Buy new or renovate: What’s right for you?
There are pros and cons to remodeling a home you’re not happy with, and there are also pros and cons to uprooting your life, selling your home, and buying a new one. To figure out what’s best for you, ask yourself:
- Am I emotionally attached to my current home? If so, that’s reason enough to stay.
- Do I love my neighborhood? Again, a good reason to renovate.
- Do I hate dealing with construction projects? If so, moving spares you that hassle.
- Do I have the patience to deal with packing and moving? If not, renovating it is.
- Will my renovations increase my home’s resale value? A real estate agent can help you determine how likely you are to get your money back on any improvements, and if you’re looking at a good return on investment, renovating makes sense.
- Do I have affordable financing options for my renovation? If not, then a move could be more cost-effective.
Clearly, there’s no easy answer. But if you address these questions honestly, you’ll hopefully arrive at the best decision for you.