Do you need more space? Would you like to have an upgraded kitchen, bathroom, home theatre? In some cases, a new house might be the best answer but in others the course of wisdom is to renovate your existing home or build an addition. How can you determine the best solution in your particular case?
Here are a few factors to consider when deciding between a new home or a remodel/renovation project:
The Cost:
Obviously a room addition or remodel will generally cost less than building an entire new home. That means financing (possibly an equity or home improvement loan) may be easier to get for an addition/remodel and may have little or no closing costs.
On the other hand, you will typically pay a higher price per square foot for an addition than for a new home, and a new mortgage may have a lower payment and interest rate than your existing mortgage plus an equity loan..
The Return:
Before undertaking a major renovation project on your existing home, consider the return on your investment. A renovation, remodel, or addition should increase the value of your home, so it is an investment and even if you don’t foresee selling the home in the near future, it is still very wise to make sure you will get a decent return on that investment. Take this seriously! Circumstances change and time moves much faster than many expect, so don’t allow yourself to make a poor decision in this matter.
Most of the time a room addition increases the value of your home because it adds square footage. Renovations and remodeling typically use your existing square footage but may increase the value a small amount due to upgraded floor coverings, countertops, etc. You may also gain value by turning unheated area (such as a garage) into heated space.
It is also very important to look at the other homes in your neighborhood. A good rule of thumb is: You don’t want to have the most expensive or the least expensive home in the neighborhood. So don’t overbuild for your location.
Time and Convenience: Either direction you choose will take time to complete, and each may bring it’s own challenges that you may not have considered:
If you build a new home, do you need to sell your existing home first? If so, where will you live as the new house is built? Will you need to store your furniture during this time? Don’t forget to plan for and count these in the cost.
If you renovate, will you be able to live in your home during the project? Will there be lengthy periods that you won’t have access to important areas of the house such as the kitchen or bathroom? How long will the water, electric, heat and air conditioning, etc. be disconnected?
In either case, a little advance planning can make these problems minor, but make sure you know the answers to these questions ahead of time.
Appearance and Functionality:
Make sure a room addition will not look like a room addition from inside or outside the house. Consider how the new roof will tie in with the existing roof. You want it to look as though it was there when the house was built. Most of the time a reputable Contractor can design an addition that will accomplish this, but if not or if the addition/renovation will adversely affect the functionality of the home, it may be wise to consider building a new home instead. (For example, you wouldn’t want to build a guest room in a location that is a great distance from the nearest bathroom. You also don’t want to have to go through one bedroom to enter another, etc.)
You should also consider things such as:
What do I like and dislike about my existing home?
Can this be fixed by renovating or building an addition?
How is the real estate market now and in this location?
Will I be able to sell my existing home for the right price?
