Thinking of renovating your space or just moving to a more suitable home all together? You’ve got your work cut out for you! Both options are considerable investments and require some serious decision making. There’s a lot to contemplate, from finances to your current lifestyle, so things can get stressful quickly. Luckily, we are here to help narrow down your options and give you more clarity on whether you should renovate or buy your dream home!

The Finances

For starters, we need to cover two crucial loans that assist in deciding whether home renovating or home buying is the right option for you – a new mortgage loan or a home equity alternative.

What is a mortgage loan?
If you are a current homeowner, you likely know the basics of obtaining and utilizing a mortgage loan. Mortgage loans finance property using the home as collateral to ensure a mortgage lender is secure in their investment in the case an individual ceases to provide a minimum payment balance due at the end of each month. There are a diverse set of mortgage loans that are made available to create more accessibility for varying lifestyle demands. From conventional loans to VA loans, each comes with its own list of pros and cons, and what is best for you may not be what’s best for your neighbor. Part of the moving process is assessing your current mortgage loan and comparing it to a new one you may qualify for. For example, when you were a first time home buyer you may have used an FHA loan which typically has low interest rates. Then, when you apply for a new loan you may suffer from current, higher interest rates. It’s all dependent on your unique financial situation, career, and if you’re a first-time borrower.

What is a home equity loan?
So, what exactly is a home equity loan? This type of loan is specifically for people who have built equity by paying off the principal of their mortgage loan. These loans are a second loan and not a refinance of your current mortgage. When you are approved for a home equity loan, you will receive a portion of your owned equity in one lump sum of cash. You are then free to spend the money as you see fit, whether it’s to pay outstanding medical bills, college tuition, or to pay for new home renovations.

Your Lifestyle

Your lifestyle has an effect on the list of necessities for your home, with functionality often being the catalyst to change your space. From having enough room for your family, to having an office space suitable to work remote, to even your hobbies, your home needs to be the right space for you! We have compiled a list of pros and cons to consider for both renovating and moving to help determine which option best fits into your current lifestyle and meets your needs:

Renovating Pros
.

You can make your current home adapt with lifestyle changes

Remain in a community and school district you love

No stress of selling your house and moving

Often times (but not always) more cost effective

Renovating Cons
.

Living in a construction zone for a while

Surprise expenses are likely to pop up making it difficult to budget for

You’re at the mercy of a contractor

You may find you lack the space to make the changes you need

Moving Pros
.

You get a fresh start

Move to a more desirable area

You can purchase a move-in ready home with no work to be done

Can grow with changing lifestyle demands

Moving Cons
.

The cost of selling and moving can add up quickly

You likely won’t find a house that checks all the boxes

The process of buying can be time consuming

Your options may be limited based on the health of the market

Plan Ahead

Another lifestyle tip to help you make this major decision is to plan for your future. Your financial health plays a lead role in deciding whether to renovate or buy and should be an integral part of your future planning. Create a budget that accurately depicts your current financial health, taking your current expenses, debts, and expendable income into account. Hire an accountant for added help and from there, determine which home investment is most applicable to your current financial situation. If you are low on funds for a big move or renovation, discuss ways to save and design an estimated timeline for next steps. When reviewing your financials consider the current housing market as well and what the market was like when you purchased your home. If you purchased your home at an affordable price and incurred a low interest rate on a loan when you purchased, you may have accumulated equity, making it smart to keep on that path! On the flip side, if it’s a sellers’ market, you may be able to get a great price for your current home to help you settle into a house that’s better suited for your life now.

The Decision

It’s easy to know when you’re ready for a refresh or need more space, but this doesn’t mean the decision is simple to make. Ultimately, the choice between renovating and moving is yours, but we hope these tips will help you weigh all the factors that are important to include in the process and get you your dream home!