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Wendy Gimpel
Wendy Gimpel

Move or Renovate? The Big Question

The current housing market has forced many homeowners to consider whether they want to renovate their current home or move to a new home. There are advantages to both, and the answer will likely depend on your personal preferences and lifestyle.

When surveying a group of homeowners in mid-2021, a few trends emerged, including a desire for more outdoor living space, a home office, or an exercise room. Homeowners who are seeking these types of features have the option to either renovate their current space or find and purchase a home that already has these aspects.

Things to Consider

Some things to consider when making a decision on whether to renovate or relocate include:

  • Interest in a new location: While you may be able to find a new home close to your existing one, most new home purchases will involve moving yourself and your family to a new location. Is this something that would impact your daily life in a negative or positive way? Would a new home move you closer or farther from your place of work, your children’s school, etc.? Would you be leaving an area with extended family that you are used to seeing often? All of these questions are good ones to ask yourself when considering a move.
  • Cost comparison: Purchasing a new home may seem like a major financial investment, renovation costs can quickly add up and you may soon find yourself paying more than you would for a new home. Before jumping in, spend some time doing a cost comparison of renovating your current home versus purchasing a new one in the areas you’re interested in.
  • Custom design advantages: You may have advantages for customization with both options, depending on your priority. If you decide to design a new home from scratch, you may have more control over customization than working with your existing layout. However, adding certain features such as an exercise room may give you more options than purchasing a new home with a predesigned exercise room.
Funding Your Decision

Regardless of which option you decide to pursue, you will need funds to pay for your renovation or new home. Fortunately, this can likely be found in your current home as equity. The recent market changes have dramatically improved home equity over the past two years, with the average homeowner having $280,000 in equity in Q2 2021. This is a historic high and sets up homeowners well to make a decision on how to use that equity.

It is recommended, however, that homeowners make their decision on using their equity quickly as mortgage rates are forecasted to increase quickly in the next year, increasing the amount you may need to pay to leverage your equity. A majority of mortgage rates are currently under 4%, and if this is the case for you, you can maintain this rate by leveraging your equity now. If your mortgage is above 4%, you should consider a cash-out refinance or purchase a more expensive home for a similar monthly payment.

Next Steps

Once you have made a decision on whether you want to renovate or purchase a new home, the next step is to determine how much equity is available in your current home. You will need to know the current mortgage balance on the home as well as the current market value. Finding your mortgage balance can usually be found on your mortgage statements. 

Contact Wendy Gimpel Real Estate Today!

Making these decisions can be difficult because there are so many factors. Contact Wendy Gimpel today to learn more about your options and what would work best for your particular situation. Wendy has served hundreds of people in Stillwater MN and the surrounding areas, including Wisconsin. Give her a call today or complete our contact form and we’ll be in touch!

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