We are seeing this question pop up a lot lately and it’s not a surprise. Interest rates are still low and, even though inventory in the Wilmington area is dropping, there are still some really good deals out there. So, this is the perfect time to assess your current living situation. If you desire more space, you have two choices – move up or renovate – but how do you decide? Here are a few things you need to consider.
- Finances.
If your budget is very limited – depending on where you live, your current mortgage balance, your credit score, the value of your home, and where you want to move – you could pay the same or less monthly for a larger home, because that’s how much home values have changed in the past 5 years. However, there are a lot of factors to consider and you should start by determining how much you can afford. Even if you decide to renovate, which could be the cheapest and smartest decision based on your situation, you will be paying a certain amount of money. If you pay cash, it’s the cost of the project. If you finance, you have to factor in an extra percentage for the bank and consider what the monthly fee will be. If you refinance to get the money, there will be refinancing fees, including appraisal fees, title fees, lending fees, insurance, etc. So make sure to research your choices thoroughly before making a decision. You don’t want to be surprised with unexpected fees later on.
- Needs vs. Wants.
Decide exactly what you need and what you want, and compare homes that have those features to those that do not. You’ll see that the extra square-footage and features will affect how much you will be paying. If you find it’s more than you expected, compare what you need now to what you want for the future. Suppose you NEED an extra bedroom, but also WANT a large gourmet kitchen. Can you get by with purchasing a home with an extra bedroom and a larger outdated kitchen (the kitchen can always be updated later) or would you rather just add on to your current home and splurge for a home with a gourmet kitchen later on? This could save you money now while still allowing you to get what you want in the future.
- Location.
The neighborhood a home is located in can greatly affect its selling price. Its age, amenities (water access, swimming pool, tennis courts, club house, etc.), and closeness to conveniences can lower or raise demand for homes inside. For example, a home in a water access community will likely have a higher selling price than a home with the same square-footage and features in a neighborhood with no amenities located closer inland.
- Market Changes.
The Wilmington housing market continues to improve overall, but that improvement varies depending on location and price range. Prices in some neighborhoods are continuing to dip while others are rising. If prices are still going down in your neighborhood, now may be the best time to sell or, if you really want to be located in a specific neighborhood where prices are going up, you may want to hurry up and buy before they rise too high. On the other hand, if you want to be located in a neighborhood where home prices are dipping, you may want to wait until they level out to avoid losing equity a few months down the road.
As Wilmington Realtors®, who watch the market constantly, we can help you determine if a home is a sound and viable purchase. If you decide renovating is your best choice, keep in mind that any renovations you do to your current home should remain in line with other homes in your neighborhood. If you over-renovate, you’re likely to not get back what you put in. If you plan on staying in your home long-term, this might not matter to you as much, but if this is a short-term fix you should consider the quality of upgrades you put into the home.
If you have any questions about a specific home or neighborhood, please give us a call at 910.202.2546 or send us a message through out Contact page. We’d be happy to do a Comparative Market Analysis (CMA) to help you decide the best route to take.
