Weighing your options between upgrading and moving out altogether? Is packing up and moving the most cost-effective way to put down roots? Or would you be better off trying to make your home improvement project a reality?
Tackling home improvement projects requires time, energy and money. If you’re lacking any of these necessities, you might be tempted to forego your to-do list and seek out a new place to live that is more in line with your wants and needs. But is packing up and moving the most cost-effective way to put down roots? Or would you be better off trying to make your home improvement project a reality?
Home improvement costs
The range of home improvement projects is incredibly vast. Tweaking window coverings, changing paint colors and decluttering can drastically transform your home without requiring a lot of time or money. If you’re in the mood to knock down walls, build on an addition or revamp your kitchen or bathroom, you’ll be looking at much higher costs.
The first thing to decide with any home improvement project is what exactly you want to change and whether you intend to enlist the help of professionals. If the job requires the work of an individual or team with the right know-how, Investopedia writer Amy Fontinelle recommends gathering three bids.
Once you have specific estimates, you’ll have a better understanding of what you can afford and determine how you want to pay for it. In most cases, you will either want to pay using your savings or take out a home equity loan, Fontinelle writes.
Just like home improvement projects, finding a new home is also a serious investment. You’ll need to enlist the help of a real estate professional. According to NerdWallet writer Margarette Burnette, an agent will typically snag a 6 percent commission fee. You’ll also need to factor in travel expenses, moving costs and securing a down payment.
You will have to make sure your current home is market-ready before you list. To earn top dollar or your asking price, you’ll probably have to spend time and money on improvement projects in your current home to make it appear more move-in ready. Your affinity for wallpaper or bold paint colors or your willingness to overlook your outdated bathroom might not translate to a prospective buyer.
Chances are the new home you choose will be bigger and more expensive than your current home, which can impact your monthly payments or the length of your mortgage. Nothing is perfect, so you should be prepared for your new home to require some updates, fixes or work of its own. Moving to a new home might take you further from work or your kids’ school, which will impact your driving costs.
There’s also closing costs, which often fall on the seller to close the deal, according to Fontinelle. If you can’t convince the seller of the home you’re buying to foot the closing costs, you’ll likely have to pay twice.“The fees for getting a new mortgage will total in the thousands of dollars. Expect to pay 2 percent to 5 percent of the purchase price in closing costs. That means if you’re moving up to a $500,000 property, your closing costs could range from $10,000 to $25,000,” writes Fontinelle.
If your current home is truly where your heart is, invest in renovations that will make it more welcoming for longer. If you and your family have outgrown your current homestead or are ready for something new, then it might be time to see what’s on the market. Both options will cost you, but with thorough research and soul-searching, you’ll be able to determine the most cost-effective solution to loving where you live.