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For the Growing Family: Is Now the Time to Build New or Remodel?

Updated: Nov 11, 2022

We live in economically turbulent times with home prices trending slightly downward and mortgage rates spiraling upward. At the same time the construction material market remains volatile despite some decrease in lumber prices at the mills. This presents a daunting challenge for growing families who have outgrown their living space.


As tiny tots become teens and need more space and maybe elderly parents move in to get the kind of constant support they need, families are faced with three choices: sell the current home and buy an existing home, buy a new home designed to meet family needs, or remodel the current home to create the space needed for the family. While there is no magic formula to use to divine the answer, the family needs to consider a few factors as they chose a path of action:


First, evaluate your current home: Are you in a neighborhood you like with schools, churches and local businesses meeting your needs? Is your home only a little too small or do you need a significantly different living space? What about your equity, do you have a lot of invested value in your current home or are you at break-even or upside down?


Second, determine what you really need for a home. Will an additional bedroom ease the strain, or do you need bedrooms, updated kitchen, and larger living space or yard? If you are already close to what you need and like the place you live, remodeling might be a good option.


Finally, look at your financial situation to see what wiggle room you have in your budget to pay for the living space you need whether it is a remodeling project or selling the current house and buying something new. For this part you need to have a real estate agent – even if you haven’t decided to sell. A qualified agent can tell you what your home is realistically worth and also show you what your budget might provide.


If your decision will involve financing there are factors to consider. If you chose to remodel, you may not have to give up your current lower interest loan and use home equity for the project. Even at today’s higher rates, only applying those higher rates to the cost of the addition may save you money in the long run.


If you will buy or build you will be financing today at a higher rate and converting any equity in your home to a cash down payment on the new home. You can always refinance later hopefully at a lower rate, but refinancing always has some costs that add to your overall cost of financing. We recommend also talking to a few mortgage lenders before you start down the path toward a better living space. You will be better prepared for the decisions you must make when you know your borrowing power and the cost of borrowing.


For help with your specific situation, reach out to a professional at Morgan Davonn Development Group for a consultation on all available options for your situation.


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