Go Big(ger) or Go (To A New) Home?November 11, 2015 / Buying
Zillow posted this article recently and we know it’s right on point for many of our customers and clients. Do you love your location, neighborhood and hopefully your home, but are quickly outgrowing it? What do you do…apply for Love It or List It?
Hopefully we (and Zillow) can make this decision easier with these points:
1. Know What You’re Getting Into: In most cases, it is cheaper to stay in your house and renovate rather than selling and moving to a bigger home. But you have to have an open mind for what renovation entails – dust, delays and chaos.
2. Check Your Finances: Do you have equity in your home? If so, would you need that money to renovate or purchase a new home? Is a home equity line of credit available? If so, you can use that and qualify for a mortgage tax benefit for the interest. And do initial research on what you could afford if you were to move and buy a bigger home. In many markets, what you can afford ends up being not much bigger than the square footage you’re currently living in.
3. Define your renovation requirements – What areas/rooms would you need to renovate? Can you afford to renovate them all at once or if not, prioritize which rooms are most important for renovation. Would you need to renovation within the framing walls of the home (which may require moving out for a time period) or would renovation require mostly an outside addition (which may allow you to live in the home while renovation takes place).
4. Research zoning and building codes – Is expansion or renovation even possible under the applicable zoning and building codes? Consult an architect and have him look at the areas for potential renovation. As Zillow points out, finishing or renovating a basement may require 2 points of ingress/egress, insulation and a certain height requirement.
5. Don’t over-improve for your neighborhood – You don’t want to invest a lot of money in a renovation where you won’t get your money back based on the surrounding homes in your neighborhood. Consult a real estate agent to learn more about comparables and how much your home would most likely sell for.
6. If you move, prepare for a different kind of stress – Moving may require you to carry 2 mortgages at once while you wait for your home to sell and move into your future home.
7. Expect the expenses – Purchasing a new home requires paying real estate commission and transfer tax fees. While closing costs and transfer taxes are deductible, you don’t realize these. Zillow says it best here:
“Deciding whether to trade up or sell and buy is incredibly personal. The most obvious thing to do is to check your finances, and see what is out there on the purchase market. Learn what’s happening and understand how you would fare. And even if it’s intimidating, seriously consider renovating. It is incredibly rewarding to be able to make your home even more custom to you.”
Feel free to contact us with questions about any housing questions you may have. We look forward to assisting you!