If you’ve owned your home for a long time, it’s easy to look around and see plenty of things you’d like to change. It can start with a new coat of paint or maybe replacing some cabinets, and before you know it, you’re considering a full-scale update.
Renovating can be expensive and time-consuming, but a survey from Clever Real Estate found that more people would rather stick with what they have than find a new home. The survey found that 63% of owners would rather renovate than move to a completely updated home.
There are likely a few reasons for that. Most current homeowners have a lower mortgage rate than the current rate. Moving comes with a variety of expenses, including the closing costs associated with buying and selling a home. Moving can also be stressful and disruptive. According to Redfin data from earlier this year, it’s no surprise that people stay in their homes for an average of 11.9 years.
If you are looking around your home and wondering if you should remodel or move on, there are some factors to consider first.
Questions To Ask Before Deciding To Make A Move
Do you need more space?
If you’ve ever watched television shows like HGTV’s “Love It Or List It,” you know that a renovation can make a big difference in how someone feels about their house. It can also open up more room inside your home. However, if you need a lot more space and are expanding your family, there’s probably only so much space you can add. Moving is likely your best bet if you need additional bedrooms and bathrooms.
Conversely, if you are finding that you need less space, then you may also want to opt for downsizing instead. If multiple rooms in your home are mostly unused, having a smaller home that costs less to maintain may make more sense. Another option would be to find additional revenue by renting out part of your home to a tenant.
Why do you want to remodel?
Sometimes remodeling is a must-do. Of those surveyed by Clever, 35% were opting to remodel to repair damage, while 35% wanted to increase comfort. Before you make any decisions, it makes sense to map out a plan. What are the nice-to-haves versus the must-haves in your remodeling plan? Is there a way to spread out your projects, or do you want to complete everything simultaneously? Deciding the scope of the work ahead of time helps prevent project creep.
Do you need a contractor?
Not everyone is a die-hard do-it-yourselfer. Sometimes, trying to do things yourself, especially if you’re inexperienced, can increase your costs. However, the Clever survey found that using a contractor doesn’t always make things better. Fifty-three percent of those using a contractor exceeded budget compared to 42% of DIYers.
The survey revealed some major issues with contractors: 32% said their contractor never showed up. Even worse, 39% said their contractor cut corners and 38% said that working with a contractor led to unplanned repairs. No wonder 29% fired their contractor in the middle of a project.
If you use a contractor, it’s important to get multiple estimates and recommendations before selecting. If your contractor can’t give you references to contact, you may want to steer clear. Also, before starting any project, it’s crucial to discuss what happens if the project is delayed or over budget. Getting everything agreed upon and in writing in a contract can save you a lot of stress and headaches. One red flag in the Clever survey was that 33% of homeowners said they would consider hiring a contractor with a questionable reputation. Sometimes going with the lowest bid can cost you more in the long run.
Can you afford it?
Most remodeling projects go over budget. Diving into your emergency fund should be done sparingly. Depending on the amount of equity you have in your home, you may have multiple options to finance your remodeling project. You will likely seek a lump-sum payment if you want to fund a major renovation. That generally means looking at a home-equity loan or, depending on your mortgage terms, a cash-out refinance. Another option is to use a home equity investment (HEI), in which you exchange some of your home’s equity to receive cash that will be paid back if you sell or refinance. No matter what path you choose, there may be additional costs that you need to factor in.
If you are going the DIY route or your projects are smaller, a home equity line of credit (HELOC) may be a better option because you can draw on the line of credit slowly over time. HELOC rates are often higher than home equity loan rates. You can shop around for the best rate.
Putting It All Together
Deciding to remodel or move depends on various factors, including the extent of repairs needed, the current suitability of your home for you and your family both now and in the future, and, of course, the impact on your overall financial health. A remodel can make you happier in your home, but the process can be time-consuming, stressful, and expensive. Careful planning that builds in room for the what-ifs that go along with any home improvement project is key.