When given the choice between keeping and loving their existing home or listing it for sale, 76% of Americans said they would rather upgrade their current home than put a down payment on a new one, according to a recent report by Zillow’s annual Housing Aspirations Report. However, that doesn’t mean renovating is always the smarter option. A number of factors impact whether remodeling or buying a new home is the best financial and emotional decision for you and your family. How do you determine which is the better decision? Here are some considerations to help you make the big choice.

Consider asking yourself these questions before starting a renovation:

  • Do you want to stay in the neighborhood?

    • If you have children, moving can be tough for kids when they have to change schools, or move away from close friends. If you like the location you’re living in and don’t want to change schools, renovating your home may be the best option.

  • Are the planned renovations within your budget?

    • In locations with affordable homes, you might lean toward buying new. In cities with expensive homes, it might be cheaper to renovate.

  • Can you remodel your home without changing the floor plan? 

    • According to Home Advisor, it costs almost 50% less to renovate your home when you don’t change the structural plans.

  • Will renovations increase your home’s value?

    • Some remodels and changes increase a home’s value, while others may not depending on your local market. You should always consult with a remodeling expert or real estate agent before you start major projects to see if they’ll add value.

  • Is this your starter home?

    • Be careful about making renovations to a home if you don’t plan to stay in it long-term. For example, if you live in a two-bedroom house and plan to have a few kids, you’ll likely need to move sooner than later. Sometimes moving to a new home is just an easier option.

  • What are the advantages of remodeling?

    • When you fix up your home, you have the power to remodel it to your likes. Assuming you make smart remodeling decisions, you may also see a high percentage return on the dollars spent, making the decision to remodel more cost-efficient.
    • Staying put also means stability. Remodeling allows the family to remain in the same neighborhood and school district.
  • What are the disadvantages of remodeling?

    • Hiring a contractor can be an intimidating process and you run the risk of inflated prices or unfinished work from unlicensed contractors.
    • The remodeling process can be time-consuming and may end up costing more than was initially planned.

Here are some considerations for purchasing another home:

  • How does moving affect your property taxes? 

    • Property taxes vary by county, and moving into a new home might mean an increase in taxes. Check with a real estate agent, your lender and the city itself to make sure you understand any property tax implications associated with moving.

  • Will there be capital gains from the sale of your home?

    • Depending on your state laws, selling your old home could land you extra money in your pocket without added taxes because of the capital gains exemption (which is up to $250,000 and $500,000 for married taxpayers). You should check with your real estate agent and tax advisor. For more detailed information you can visit irs.gov, Topic No. 701 Sale of your Home.

  • What are disadvantages of selling?

    • There are high costs to selling a home which involves paying your real estate agent and other fees throughout the process. It can be long, complicated and expensive, and you have to be willing to go through it to acquire your new place.
    • ​There is currently a lot of competition with others buyers who are seeking similar homes in the same sought out neighborhoods. It is a seller’s market, because of low inventory and the low interest rate environment, so it is very common for homes to get multiple offers and sell over the asking price. 
  • What are the advantages of relocating?

    • It’s exciting to start over in a new place whether it’s down the street or in a new neighborhood, city or state. You get to meet new people and settle into a new landscape.
    • ​You can buy a home that fits your current needs. For example, maybe you only had two bedrooms and now with the growing family you will have four bedrooms and with a better backyard to boot.

What’s the best decision for you as a homeowner? Of course this is a question with no one-size-fits-all answer and most families can come to a decision with a lot less drama than in the popular TV series. Consider how you answered the questions above and weigh the pros and cons. Whichever you choose, get the finances, paperwork and appropriate professionals lined up before you proceed.
SDCCU is here to help as your trusted home lender when you’re ready to move forward with remodeling your home by securing a home equity loan or HELOC to help you access the equity in your home. To see if you qualify and to apply, contact your nearest branch or visit us online at sdccu.com/loans.
If you decide to list your home, you can take advantage of a number of programs for homebuyers when you purchase a new property, like our no closing costs 5/5 adjustable rate mortgage that offers flexibility and stability. You will find low fixed rates and adjustable rates for home loans that offer low monthly payments and down payments as low as 10%. We also offer a 90-day rate lock once you find a property. Submit your application today and see why SDCCU was voted Best Mortgage/Home Loan Provider in the San Diego’s BEST Union-Tribune Readers Poll.

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