To Buy or to Renovate: That is the Question

Different people have different reasons for wanting to move out of their humble abode.

Some people need more space. Some just get tired of their home’s design style and want a chance. Maybe you’ve landed a new job; in a new relationship; or you’ve just had a baby.

The list goes on.

But, according to Zillow, buying a new home is never the only solution. In fact, in some cases it may be better to remodel or renovate the home you already have.

If you’re on the fence between renovating and selling, here are some points to consider:

When you Decide to Buy a New Home, You Must Sell your Current Home

Given that lending standards are still tighter than they were a decade ago, it’s nearly impossible for most people to buy a home before selling their current one.

Selling a home can be quick and painless or it can lead to many unwanted headaches. It means being in limbo and potentially homeless until you find a new home sweet home. Some people don’t mind and can just go with the flow while other people don’t fare well under those conditions. Know yourself and what you and your family can handle.

There are also other factors to consider, too. For starters, in many parts of the country, the inventory of available homes is limited. You could probably sell your home easily if choices are scarce in your area, but then you could potentially be homeless or in that state of limbo we just mentioned. Few people want to take that gamble.

Buying and selling also comes with a lot of costs. For instance, the seller pays the real estate agent’s commission, along with closing costs on the buyer’s side. Think about your money and ask yourself if it will be better spent on a renovation. Only you know the answer to that question.

Credit Is Easier to Get Now

With property values up, homeowners in some parts of the country are realizing an increase in equity of 10 percent to 20 percent over just a year ago, according to Zillow.

If you suspect that your home equity has increased, call your local bank or mortgage professional or do some research online. You might be surprised to learn that a bank will lend you more money against the equity in your home than you originally thought possible. It never hurts to try.

Also, a home equity line of credit (HELOC) is also considered a mortgage, therefore, the interest part of the loan is tax deductible—and we all like to hear that.

Ask the Pros for Advice

You probably have a lot of ideas about what you’d like to do to renovate your home because you know it best—but it can be overwhelming—and you may not know where to start. Don’t assume anything and so some research beforehand to find out how much those potential changes may cost. If you don’t know a good, local contractor or how to get the information you need, ask for referrals from friends and family. They’d be happy to help.

You Don’t Have to Make your Home a Castle

Sometimes, small changes can make a big difference: change the flooring, paint the walls or reface the kitchen cabinets. Even these small changes can make a big impact.