As a homeowner, there may come a time when your current house is no longer enough. It could be too small, not modern enough or simply not in line with your personal goals. At this point, many might suggest putting the property on the market. However, that could be a costly endeavor in today’s real estate climate with a poor return on investment.
Remodeling has grown in popularity as an alternative to selling your home. Yet, this option has its drawbacks too. Construction loans can be costly, your improvements might not increase the home’s future value and, if you do plan to sell in a few years, changes could put you further in debt. So, before you make a decision, consider the following factors.
Personal Attachment
After you’ve lived in a home and community for years, you develop strong bonds – perhaps with your neighbors, your children with their school or your involvement in the town. Unless you plan to purchase another house nearby, understand moving away could force you to start all over again. With this in mind, you might want to remodel first before you plan a significant move.
Long-Term Costs
Up front, remodeling comes with a significantly smaller price tag than buying another home. Yet, consider the long-term ramifications of your choice:
- Will the improvements pay for themselves if you decide to move years later? Some upgrades can increase property value, resulting in a higher selling price. But, depending on what you do, you could recoup from as low as 50 percent to as high as 90 percent of the project’s costs.
- Even with the upgrades, will your home be on par with the rest of the neighborhood? If you create a larger, fancier, more modern property than the surrounding homes, you could end up lowering its actual value. How does this work? The typical buyer looking at your neighborhood might find your property too expensive and you’ll have to wait longer to sell it or accept a lower offer.
- Compared to purchasing a new home, remodeling still costs less on a per square foot basis – $100 for a new home versus $95 for remodeling.
The Need for Space
This factor can go either way. If you’re attached to your existing home, it’s possible to work with a designer or architect to reconfigure the interior to open more room and make the property more efficient.
Yet certain life changes, like a growing family or an elderly parent moving in, may require you to move. A larger home can provide the extra bedroom and storage space you need to accommodate more people. On the other hand, if your existing home is too empty or breaking your budget, opting for a smaller house may meet your expectations.
Upgrading Your Life
Maybe you want to live in a different neighborhood, perhaps one that is safer or closer to central locations, or you want higher-performing schools for your children. Although some attempt to get around this by considering magnet, charter or private schools nearby, finding your community involves leaving your current location and purchasing property somewhere closer to your needs.
Getting a Loan
Along with the factors listed above, getting a mortgage turns out to be easier than procuring a construction loan. Should your renovations call for this level of financing, be ready to have a better credit rating, pay higher interest and receive shorter payoff terms. Understand that you’ll need to prove the home’s existing equity, cost of your completed project and its projected market value at completion.
Whether you’re looking for something smaller, a property you can customize on your own terms or an existing home upgrade, there is a By Carrier community for every stage of life in Central Connecticut. To learn more, give us a call today.