To buy new or Renovate? That is the question

You graduated with honors, landed a respectable paying job and have been squirreling away money for the past few months now. Your home is in need of some major renovations, but you find yourself often dreaming of just throwing in the towel and investing in a new house purchase to call home – preferably one that isn’t a money pit.

Should you buy a new house or make the renovations needed to make your current house livable? This question is actually quite difficult to answer; sorry guys; and depends on several variables. The most important variable (this probably isn’t the answer you were hoping for) is determining your immediate financial situation.

Determining the net costs of picking up a hammer, or having someone do it, versus the net cost of doing absolutely nothing and walking away or vice versa is the first question you should carefully consider. Another consideration that should be mentioned is the emotion stress that these two options cause.

Depending on your family size, you may want to determine whether making renovations – particularly those that involve adding on space – is feasible. Look at your existing home’s property lines (you can typically get a property line map from your county assessor). Is there any room to expand? If you’re able to expand, you will then need to gather cost estimates and determining your return on investment.

With home values falling across the country, and interest rates at historical lows, homeowners faced with a home that is already more expensive per square footage should tread with extreme caution. You wouldn’t want to find yourself upside down in your house, now would you? The opposite holds true if you had bought the cheapest home on the block as you’ll acquire equity by renovating.
The costs associated with renovating your existing home aside, when making the determination as whether or not to purchase new or renovate the old, you should also determine whether you want to deal with the headaches that come hand-in-hand with renovations.

Should I purchase new?

While you’ll be left with something beautiful, you’ll also have to deal with the fact that something will go wrong and that it will cost more than you initially anticipated (make sure to include extra money in your budget for hiccups like these).

While renovating your home will again leave you with a stunning piece of art (alright, maybe I’m exaggerating just a tad, but you never know); there’s just some things such as a bad neighborhood, schools, size, location, etc. that are still going to be there no matter how good your home looks. Just look at that show on HGTV “Love It Or List It” for confirmation.

Moving isn’t free from its own share of stress and headaches, but it’s often less painful. You will encounter costs such as down payments, closing costs, packing costs and moving costs – the last two of which will also take up much of your time. It’s up to you to determine which of your two options – doing absolutely nothing may or may not be a viable option for some – you would hate more.
The final determining factor you should consider includes finding the funds necessary to move. While you may enough in savings to cover moving expenses or some minor repairs, chances are you will have to acquire a purchase or refinance loan in order to cover the rest. This is where today’s low interest rates, available for both purchase and refinance, can be of great benefit.

Buy new or renovate: the determining factor

You never know, you just may get the home you want, whether it’s by buying new or renovating, at a lower cost to you. The best thing to do is to a close look at your finances (yes, it’s worth repeating) and contact a reputable lending institution such as Forthright Funding at 855-351-9522 to discuss your available options.