Moving On and Moving Up

Home is where the heart is…  that’s true, but when do you decide whether to transplant your heart to a new home or spend the money remodeling the one you have?

If you are debating whether to update or buy, the following pros and cons may help in your decision-making.

Searching for a new home can be exciting and  fun.  There is so much to think about… location, schools, shopping.  There is also the price to consider.

The most positive aspect when consdiering the price is that there are typically no surprise costs.  Before you make an offer you know the property value and the taxes; you can ask for the owners’ utility costs for the past year; you can see the cost in terms of upfront and long-term.  There are few surprises, but keep in mind other costs that will occur:

•  real estate commissions, closing costs and moving, which could typically be 8% or more of the house you’re selling.
• The cost of the new (most likely bigger) mortgage.
• Any new furniture, window treatments, landscaping or other purchases that will make your new house feel like your home.

Remodeling can be a lot of fun too.  Home design magazines, strolling through design stores, sketching with your spouse or kids over dinner… all of this is so exciting.  Remodeling is a significant investment in your home.  Saving on these costs will undoubtedly give you a good feeling.

It’s important to note that when remodeling, surprise costs are not uncommon.  The Wall Street Journal found that, depending on your proximity to major metropoitan areas, the price of keeping a typical home up to current standards over a 30-year period is almost four times the home’s purchase price.

Remodeling veterans recommend building in a safety net by adding 10-20% to contractor’s estimates.  You should also consider out of pocket costs including financing (generally credit interest erates are higher than mortgage rates), higher utility bills, larger homeowenr’s insurance premiums and greater property taxes on your additional space. 

(CurrentsNJ Vol.II 2009)  http://www.currentsnj.com/

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