In our previous post we discussed the Life Concerns and Questions you need to explore when considering if its best to update your home and stay or sell and buy a new home. In this segment we’ll go over the Economic concerns and questions to consider.
Answering the economic concerns will take much more effort, but will be worth the time to make a confident decision. This process is focused on helping you decide if your money is better off being used in the current home or moving into a new one. It is assumed for this discussion, that you are financially capable of making a move happen OR updating your current home. If you are not clear of your abilities (and lending guidelines have changed dramatically over the past few years), contact our lending team, RMS Mortgage-Jason Linscott 978-269-5454, to understand what you are capable of doing.
You’ll also need some cost estimates related to updating your home, here is the Cost VS Return report published by Remodeling.com for the Boston MA area (other areas are available). The report shows many different remodel projects both for mid-range and upscale projects.
There is one important assumptions here: When looking at new homes for potential purchase, we’re looking at homes that are similar to your current home but with the updates already completed. If you’re considering a much larger or higher quality home than your current one, than that is a different set of questions.
OK here we go. The first step of this process is to determine the current value of your home in its present condition. Contact us now so we can come out and give you a RPRV (Realistic Price Range Valuation) report.
Second, determine the costs associated with selling your home like; reconditioning needs to make the home sell, moving expenses, tax liabilities and commissions.
Looking at buy side, determine the costs associated with buying a new home like; costs to obtain the loan, upfront fees like pre-paid insurance, real estate taxes and interest, and additional down payment monies needed.
Note. When meeting with us, we’ll be able to give you deeper insight into all these fees and offer strategy suggestions to help fine tune your answers.
Next, review the current housing stock for homes that meet the needs your looking for when updating your home, we can bring that with us to our RPRV appointment.
Finally, determine how much it will cost to obtain the money for updating if you do not have it saved for this use. Costs for obtaining the funds could be related to a refinance with cash out on your current home, a HELOC, or even financing options from your contractor.
Now armed with this information, do your best to explore these questions.
- Is the money to update my home, more or less than the money needed to sell and buy a new home? How do I feel about that
- If I buy a new home, how will the new home payments, and length of payments affect my future?
- If I were to finance the updates, how will that payment affect my lifestyle and working needs?
- If I were to buy a new home, would the new home be a better investment than the updated home I currently own? (very important to know if moving to a new town or different part of your current town)
- Once my home is updated, how much could my equity (what its now worth minus what I owe) increase? Its important to understand this question especially if your financing your updates. Also understand the most remodeling projects do not increase your homes value by the amount of the updates.
- How does the current outlook for Real Estate sales and prices in my area look for the next year or two?
Are there any other economic related questions that are important to you? Make sure to review those as well.
After answering, is there an overwhelming feeling that moving is the right thing to do? How about staying where you are?
Finally, you may want to speak with your tax adviser. Given your unique circumstances there maybe some benefits to either option that can help make the decision more obvious.
And of course please call me if we can help you in this process.
For over 30 years the Prime Property Team and Ron Carpenito of Keller Williams Realty Andover have been helping home buyers and sellers in Andover, North Andover, Haverhill, and the Merrimack Valley with their real estate goals. If you’re thinking of buying or selling a home anywhere in Massachusetts or know someone who is, contact Ron today at (978)494-0346.
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