Maybe your current house wasn’t exactly the home of your dreams when you first moved into it. Chances are it was too small, too modest, in a less-than-optimal neighborhood or too far away from your ideal conveniences — especially if it was your first home and you were just starting out.
On the other hand, by now you may have developed an emotional attachment to your residence, placing value on the memories you’ve made through the years, the quirks that give the place character and/or the bonds you’ve formed with friendly neighbors.
At this point, then, you may be asking yourself “Do we upgrade by moving to a newer, nicer house, or do we stay here and invest in renovations instead?”
One study shows that since 2009, nine years has been the median interval U.S. homeowners have stayed in one home; between 1985 and 2008, that interval was a much shorter six years. But every family is different, and your own answer may require a blend of soul-searching and practical considerations. As such, you might think about the following issues before you come to a final decision.
- Can you realistically afford a new home after objectively evaluating your current income, expenses, debt load and overall financial picture? Amplify offers a handy calculator here that can help you find the answer.
- To what extent are you capable of adhering to the budget you would need to afford a new home?
- Alternatively, to what extent would downsizing to a more modest home represent a financial advantage for you?
- How much equity have you built up in your current home, and how would that affect the terms and interest rates you could secure with a new mortgage? Are prevailing interest rates considered favorable, in general?
- How difficult would it be emotionally for you to give up your home for a new location?
- How hard would a move be on your family members? Transitioning to a new house and school may be stressful for children, but can also help them learn to adjust to change, reports Anna Sutherland in an article posted by The Institute for Family Studies.
- How much would renovations likely cost? Would you be able to incorporate the materials and finishes you’re envisioning, or would you have to settle for more affordable options?
- Are the renovations you’d like to make structurally feasible? An architect or general contractor should be able to advise on that and/or make further suggestions.
- What regulatory hoops would you need to jump through to make your planned renovations legal? Would there be any barriers relative to health codes, construction codes or requirements of historical or homeowners associations?
- How long would renovations take? How uncomfortable and/or inconvenient would the renovation process be for your family? Would any health issues such as allergies be a factor? Be aware some kitchen remodels can take up to six months, while bathroom remodels typically take two to three and room additions may require one or two.
- Are there ways of creating more usable space in your home without adding more square footage, such as removing or adding walls or renovating your basement or attic?
- If you complete renovations, would you remain in your home long enough to get full value out of them?
- To what extent would your plans for renovation improve the market value of your home? You may be surprised at changes that do and don't pay off; a partial list is here. You should also be aware that home appraisals rely heavily on the selling prices of other area homes, such that you may be at a disadvantage when you go to sell a home that's substantially more upscale than its neighbors.
- Finally, will the problems you’re trying to solve be alleviated if you move to a new location, or will some of them come with you?
Your decision to move to a new home or make over your existing residence could be a major turning point in your life. Considering all the pros and cons of each option can help you make an informed choice you can live with as you move into your future.