Renovate or Move? It's Complicated
Deciding whether to renovate your existing home or buy a new one involves more than purely financial considerations.
For homeowners, few decisions are as agonizing - there's a reason why a reality television show built around this very idea has been so successful.
If you're a homeowner debating whether to renovate or move right now, it can difficult to arrive at a purely objective decision. Many times, we're attached to our homes, and that attachment can't help but influence our actions. Our homes are where we build our lives, and they serve as the backdrop for much of our family history. On the other hand, the prospect of a new home is almost always thrilling in its own right.
Once we step outside of the realm of emotion, there are a couple of core questions to consider when pondering the relative merits of renovating vs. moving: these involve location and budget. Do you enjoy your current area and can you build the home of your dreams there? Is the remodeling process within your budget, or does it make more financial sense to buy a new home?
Other questions that can help you arrive at a decision include:
- Can you afford to renovate at this time without stretching your budget, depleting your savings or assuming unsustainable debt?
- Do you have an issue that can't be resolved by staying (school districts, neighbors, space, etc.)?
- Do you have the time and energy to oversee a major renovation?
- Will you recoup the expenses associated with a renovation?
- Is your home structurally sound enough to handle the work?
- How long do you plan to stay?
- What are the financial implications in terms of taking out a new mortgage vs. refinancing for renovations?
Sorting through questions such as these will help you arrive at a more informed decision. It's important to weigh things carefully, as both choices have major financial implications moving forward.
If, ultimately, you decide to opt for renovations, your next move is to explore the different variables that surround this process. This week, we're going to take a closer look at some of the key areas of concern for renovators. These include:
- How to pay for renovations
- The distinction between "home repairs" and "home improvements" and what that means to the IRS
- Whether opting for energy efficient upgrades is worth the cost
- The tax benefits attached to renovations
- Whether renovations are worth pursuing in some circumstances
- The most common mistakes people make when undertaking the renovation process
After exploring these issues, we are confident you'll be able to make an informed decision about whether to pursue a sale or a remodel, and undertake any new renovations in a manner that makes financial sense.