It’s a question a lot of folks ask themselves when they start thinking about selling their home. My husband and I ran into the same quagmire when we started discussing needing more room for the kids in the future. There was no easy answer. We talked about how we loved our current neighborhood and ease of travel to anywhere we needed to go, the friends that we already made and also how sought after our current neighborhood was. It took us about 3 years before we committed to remodeling our home. I joke that my husband had a real estate search running for 2 years but his Realtor refused to take him out and look at homes.
A couple things to think about when considering renovation over moving are:
- How much equity will it add to your home?
- Can you find another home that will fit your needs?
- Will the changes fix the current issues you face today?
- Does equity really matter if you plan to stay in the house for years?
- How to finance the renovations?
How much equity will it add to your home?
Equity is important if you think you might want to sell your home in 3 to 5 years. You are not going to get all of the money back dollar for dollar for everything you might change so keep that in mind. I tell my listing clients if you are going to update kitchens and bathrooms make sure you get some use out of them before listing. It won’t sting as bad if you don’t get all your money back from the changes that are made. In our situation we were juggling with our budget, not going over board with additions to the home and pricing the home out of the market. In the end we justified being over budget a little by knowing that this is our forever home. It helps that we have a fantastic lot and one of the smaller houses in the neighborhood.
Can you find another home that will fit your needs?
Of course! There are plenty of homes in the Northern Virginia Area to choose from. Our needs most likely were going to come with a much higher price tag and we were going to have to leave the neighborhood we love. We absolutely love Loudoun County and wouldn’t want to live anywhere else. With us we already knew what we needed to change to make the home fit our needs and that was really hard to walk away from. Now I have a beautiful Kitchen, Great Room and Master Bedroom Walk-In Closet. My kids have plenty of room for friends and we can hold a party without feeling cramped.
Will the changes fix the current issues you face today?
This is important. If you’re not going to get everything you want out of remodeling and spend a good amount of money doing it, don’t even consider it. The process of remodeling can be very stressful and be rough on a relationship.
Does equity really matter if you plan to stay in the house for years?
It matters in regards to overspending when it comes to doing renovations on your home. Remember to take into account the homes that are in your neighborhood. If you have a neighborhood with smaller homes you don’t want to have the extra large home among the smaller homes. It would be a better option to sell and find a home that fits your needs better.
How to finance the renovations?
- There is the obvious way by saving up and paying out of pocket. This might insure that you stay on budget.
- You can find out from a lender if you can do a Home Equity Line of Credit. In order to do a HELOC you need to have equity in your home either because you have paid down your primary loan over the years or the appraised value of the home has risen. A HELOC is great because you can pay it back and use it over and over again. You can also write off any interest that has occurred just like your primary mortgage.
- Renovation/Construction Loan is another option. These are becoming more popular. You can obtain a loan based on what you think your home may be worth after you have completed your project. Fannie Mae and FHA have these home renovation mortgages. Here is a little more about these programs: http://www.bankrate.com/finance/mortgages/mortgages-pay-home-renovations-1.aspx
Hope this information is helpful when trying to make your decision to move or to renovate! If you have any further questions I would love to help. You can reach me at firstname.lastname@example.org or by phone at 571-299-8307.