From noisy neighbors to a growing family, most of us have had reason to think, "It's time to move!" But before you break out the packing supplies, take a deep breath and ask if you really need to relocate — or can your problems be resolved with a little home improvement? We'll give you four factors to consider when making your decision.
Can you fix the problem?
• No: consider moving. Some things you simply can’t change, like the size of your yard, the neighborhood schools, the view or the traffic conditions. Other revamps may be restricted by zoning regulations, rental agreements or excessive cost.
• Yes: consider improving. Many upgrades are more realistic, though, such as finishing the basement, improving the landscape, remodeling a bathroom or adding sound-reducing insulation.
Could you make a profit selling?
• No: consider improving. If you own a home, but owe more on your mortgage than the home’s current market value, then you likely won’t make a profit if you sell. Plus, you’ll have to make up the difference between your home’s selling price and your mortgage balance.
• Yes: consider moving. If you can reasonably expect to break even or make a small profit by selling your home, then moving can make sense. Plus, when you sell and start your new home search (or if you rent and are looking to purchase), you’ll be able to take advantage of today’s buyers’ market, with lower home prices and lower mortgage interest rates.
Is your home already nicer than the neighbors'?
• Yes: consider moving. If your property is already among the nicest in the neighborhood and/or at the top of the price scale for your area, then increasing its value even more by remodeling may actually make it harder to sell. Also, you rarely get back through the sale price the amount you spend on remodeling — some project return close to 80 percent, but others return barely 40 percent.1
• No: consider improving. If your upgrade will increase your home's value up to the neighborhood average, it might be a sensible undertaking. And even if you don't fully recoup the cost, remember that buying and selling a home can be pricey, too, with commissions, closing costs and other expenses.
What would make you happy?
Both moving and improving have their headaches, from finding professional assistance, to enduring a time-consuming endeavor, to the upheaval of your daily life. And both are likely to involve financial investments and compromise.
So — assuming both options are financially feasible for you — the question may come down to basic emotion: Would you be happy in your current home if you made some changes, or not? That answer may be all you need to direct your next step.
• Find your local Rabobank mortgage representative, who can help with your home loan and refinance needs. For information on home equity loans and lines of credit for home improvement, call your local Rabobank branch. Remember: If you are a Rewards Banking customer, you may qualify for special rate and fee discounts on a loan or line of credit.
• To investigate home values, check local real estate listings, talk with a real estate agent or use online tools such as Zillow.
• For insights on the return on investment of different home improvement projects, see Remodeling magazine's Cost vs. Value Report.
• To compare the cost of moving against the cost of home improvement, use HomeGain’s Home Improvement vs. Moving Calculator.
- Based on the Remodeling 2011-12 Cost vs. Value Report (www.costvsvalue.com).
The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.