Time to Move or Time to Improve? Moving Vs. Home Improvement

Q: My family is growing out of our current home and we’re desperate for more living space. Should we move to a new house or make some major improvements to our current home?

A: Choosing to move to a new home or make improvements to your current home is a big decision! The right answer will depend on your general financial situation and other personal circumstances. Here are some of the pros and cons of each choice so you can make the best decision for you and your family.

Moving to a new home

For most people, a home is the largest purchase they will ever make. It can take years to save for a down payment on a home, as well as many months of planning and wise decision-making before a home purchase is finalized.

Pros of moving:

• Opportunity for a fresh start. You can choose a new location that better suits your needs, such as a superior school district, proximity to family or work, or a more desirable community.
• More living space. This is especially beneficial if you have a growing family or want to add more amenities to your home, such as a home office, designated playroom, or gym.
• Potential for appreciation. If you buy a home in an area that is experiencing growth, your property value may increase over time, resulting in a return on your investment.
• No dealing with renovations. If you purchase a home that’s already in move-in condition, you won’t have to deal with the headache of renovations.

Cons of moving:

• Exorbitant upfront costs. Moving to a new home doesn’t come cheaply. You’ll need to spring for closing costs, a down payment, the actual move, and for any new furniture you may need to purchase for your new residence. Selling your current home will also cost you in renovations, agent fees, and title insurance.
• Emotional attachment to your home. Did your children take their first steps in the kitchen of your current home? Did your dog have her puppies in the garage?  If you’ve been living in this home for many years and it holds lots of happy memories, you may be reluctant to leave.
• Difficulty finding the perfect home. You may need to settle for a home that is less than perfect in many ways, which may end in more stress and regret.
• Stress of selling your home. The housing market is unpredictable, and you may not be able to sell your current home for the desired price.
• Potentially higher interest rate on your mortgage. If rates have increased since you bought or refinanced your current home, or your credit score has slid, you may end up with a higher interest rate on your new mortgage. That could mean paying much more in the long run.

Questions to ask before deciding to move

Before you move ahead with the decision to move to a new home, ask yourself these questions:

• What are the market conditions like in my current neighborhood? Will I be able to get the asking price on my home within a short amount of time?
• What are the market conditions like in my desired neighborhood and how are they trending? Will I be able to find a home that suits my needs and is within my price range?
• Do I have enough money saved up to pay for the move? Will I need to wait until I sell my home or take out a short-term loan to cover the gap?
• Is this a good time for my family to move?

Improving your current home

Now, let’s take a look at the option of improving your current home with a Home Equity Line of Credit (HELOC). A HELOC gives you quick access to cash by using your home as collateral. You can withdraw the funds, as needed, over a period of time known as the draw period. When this time is over, you’ll no longer be able to advance funds and will repay the loan, with interest, over the repayment period.

You can also take out a Home Equity Loan (HEL), which will provide you with one lump sum, generally at a fixed rate and payment. With a HEL, you start paying back immediately.

Pros of improving your home:

• Completely customize to fit your needs. When you design your own home, you can have it customized to perfectly suit your family’s needs and your own tastes. You can have trampoline floors in the playroom and built-in bookshelves in the family room. The possibilities are endless!
• No stress of relocating. When you renovate your home, you can continue to enjoy the same home and neighborhood you’ve lived in for years.
• Increase the value of your home. Home improvement projects increase your home’s value, increasing your net profit when you do decide to sell in the future.
• Save on moving costs. Why pay thousands of dollars in closing and moving costs when you can have a beautiful new living room for the same price?

Cons of improving your home:

• Stress of renovations. Dealing with a home improvement project can be very stressful. There are loads of decisions to make, large messes, and workers in your home at all hours of the day.
• Risk of foreclosure. Taking out a HELOC or HEL puts your home at risk of foreclosure if you are unable to make the payments. This can have long-term consequences on your credit score and financial stability.
• Additional debt. A HELOC or HEL adds another debt to pay each month, which can be a burden on your budget.

Questions to ask before deciding to improve your home

Before you go ahead with the decision to improve your current home, ask yourself these questions:

• Can I afford the monthly payments on a HELOC?
• How much will a home improvement project cost me?
• Will I be able to handle living in a construction zone?
• Do I want to continue living in this neighborhood?

Whether you choose to move to a new home or renovate your current home, we can help! Scott Credit Union offers home loans, HELOCs,  and HELs with competitive interest rates, easy eligibility terms, and the personal service you’ve come to expect. Call, click, or stop by any of our locations today to learn more.