If you’ve been in your home for quite some time, you may find it no longer meets your needs. This may leave you wondering whether you should buy a new home and move or renovate your current home with a home improvement loan or another financing solution. While renovating is typically the more cost-effective option, it’s not always the right choice. We’ve collected some information to help you if you’re thinking about staying and improving your home or moving to a new space.
Questions to consider
Before you decide, it’s a good idea to ask yourself the following questions:
- Do you like your current location? If you like your neighborhood and school system, renovating your home might be a good choice.
- What is your budget? If you live in an affordable area, buying may be cheaper. But oftentimes, improving a home could save you thousands of dollars in the long run.
- Do you want a new floor plan? It can be expensive to make structural updates. If your floor plan is dysfunctional and you’d like to knock down walls, open up rooms and make major structural changes, buying a new home may be the better choice.
- How will your existing home mortgage be affected? Moving can result in lower or higher mortgage payments. Think about what will happen in your unique situation especially as mortgage rates in the U.S. have increased because of rising interest rates.
Pros and cons of moving to a new home
If you move to a new home, you’ll be able to start over in a new neighborhood, city, or state. This will allow you to meet new people and explore new places. You may also enjoy a newer space that works well for your current lifestyle. Depending on where you move and the price you pay for the new home, you may save money on mortgage payments as well as property and income taxes.
There are downsides to moving such as the considerable expense of packing up belongings and engaging movers. It may also take some time to sell your home, so the potential added expense of making two mortgage payments every month for an open-ended period should be considered.
Pros and cons of renovating
In some cases, renovating a home doesn’t have to be an out-of-reach expense. This is mainly because you can update it room by room. You don’t have to tackle everything at once and can save money in the process, especially if you do the renovations yourself and perhaps source second-hand materials. Renovating allows you to create a space that’s truly your own and meets all of your expectations.
If the home needs a complete overhaul, however, it might not be worth it to spend thousands to change every room when you can buy a house with all the updates you’d like. Unless you have lots of cash at your disposal, you’ll need to take out a loan or find another way to fund the project. Lastly, whether it’s a room by room or more extensive project, renovating means dealing with a construction zone that can interfere with your everyday life.
The Bottom Line
At the end of the day, you decide whether you should buy a new house or renovate your existing space. Be sure to think about your unique situation and the pros and cons of each option, and you’re more likely to come to a sound decision.
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