Many homeowners find that their home no longer fits their lifestyle. What was perfect 20 years ago, may not be so perfect anymore. Whether their family has grown, older children have moved out, the house needs repairs or aging adults need a more accessible layout, the decision to remodel or sell is significant. It requires time, money, knowledge and patience.

Low interest rates add to the attraction of selling a home and buying a new one, but those same low interest rates could be used to refinance or take out a line of credit against the equity in your home to have the available funds for the renovation of your dreams.

What if you love your neighborhood, the ease of your commute or your school district? Is that enough to stay or can you find those same attributes in another neighborhood? Being comfortable with your community is an intangible benefit that can’t be replaced when you move. If you love where you are and depend on your neighbors, it probably makes more sense to remodel.

The reverse is also true. If you’re not happy with your home’s location, or with other factors that a remodel can’t fix, it might make sense to sell and find another home.

Before making a decision, you may want to make a list of the things in your home that need to be changed or renovated. For example, if your family’s growing, you might want to add a bedroom or a bathroom. If your kitchen is outdated or your appliances are inefficient, it may be time for a kitchen upgrade. If you need additional space, you may want to add a family room to an unfinished basement.

Try getting a rough estimate for your home renovation by reading industry sources, such as Remodeling magazine, which publishes a list of typical renovation costs across the country. The average cost to add a bathroom, for example, is about $40,000, according to the magazine.

It is also a good idea to consult with an experienced realtor. Ask their professional advice about the value of your home, and in their opinion, if your home is “sellable” as is.  Ask your realtor for an estimate of the out of pocket costs associated with the sale of your home, which can affect the net funds available to purchase your new home. Your realtor’s commission, attorney fees, transfer tax and title insurance could go into the thousands so it is important you have a full understanding of the process before signing the dotted line.

You may also want to ask your realtor if your home warrants a remodel. Some neighborhoods are in high demand and if your home is “move in ready” it can bring greater value to a potential buyer.  If neighboring homes are worth more than yours, a remodel could bring the value of your property in line with others in your neighborhood, which could be a good investment.

When considering a new home purchase create a list of “wants” and “needs”. Where are you looking to move? Home sales vary by neighborhood, as do real estate taxes.  The same home in a different area, may cost more or less depending on the attributes of the neighborhood and the tax burden.

If you are considering a remodel, you should consult with an Architect to see if any of the renovations require filing with the Department of Buildings. Adding onto the size of your home, adding a bathroom and plumbing fixtures or building out a basement warrants filing with the agency and can affect the cost of your home remodel

If you need more space but have restrictions on adding square footage to your home, then selling and buying a bigger home may be the better choice.

If you’re leaning toward a remodel, contact a local, licensed contractor for a more detailed estimate. Do your homework and get at least three estimates and make sure the contractor will issue Certificates of Insurance for General Liability and Workers Compensation.  Also make sure to call the Department of Consumer Affairs at 311 to make sure the contractor’s license is valid.

Both options have pros and cons but whichever you decide, it’s important to ensure that you have proper financing in place prior to moving forward. If you decide to purchase a home, a licensed mortgage loan originator will help you to determine how much you can afford, as well as which loan package works best with your overall financial plan. In the case of remodeling, you should meet with a Licensed mortgage loan originator professional before any construction takes place to determine the right financial path to take.

Knowledge is power. Being in control of your finances when it comes to either remodeling your home or purchasing a new one is priceless.

Chris Caggiano, Principal             Grand Oaks Funding

Licensed mortgage loan originator NMLS # 113009

(718) 477-4405

Registered Mortgage Broker – New York State Department of Financial Services. Licensed by the NJ Department of Banking & Insurance.

Mortgage Broker Licensed in Florida NMLS#1191131