Many homeowners outgrow their current homes and think about selling their home to a bigger home. There is a lot of stress and cost involved in selling your current home and moving to a larger home. Selling your current home and buying a bigger home is a process. There are also many costs involved such as realtor’s commissions and furnishing your new home.
Qualifying For Home Loan
Qualifying for a mortgage loan is another important thing to consider. Will you need to sell your home first in order to qualify for your other home or can you qualify for both mortgage loans. If you cannot qualify for both mortgage loans, then you need to time the sale of your property with the purchase simaltenously. Another option a homeowner who needs more space has is doing a major home improvement to their existing home. Many consider home improvement where instead of buying another home, they consider improving their current home by doing a room addition and updating their whole house.
Things To Consider When Considering Doing Major Renovations
Again, doing major renovations to your existing home requires a lot of planning such as hiring an architect to do the plans for you and hiring a general contractor. Construction can take months and you need to consider living accomondations. Are you going to live in your home while it is being renovated? Are you going to live with friends or relatives or rent a temporary furnished home?
Things To Consider When You Decide To Renovate Your Home
One of the major things you need to keep in mind when you decide on an extensive home improvement project is that you do not over improve. Having the biggest home in the neighborhood or your area is not a good idea. If you have a $1,000,000 home in an area that the median housing value is $500,000 is not a good idea because you will get into problems when it is time to sell your home or when it is time to refinance. If you decide to sell your home and the home buyer orders an appraisal, the appraiser will have a hard time getting an appraiser to appraise your home for $1,000,000 if there are no comparable sales.
Do Not Over Improve Your Home
Homes that are unique and overly priced for the area will have a difficult time for an appraiser appraising it. These types of homes are called White Elephants and the only way they normally sell is from a cash buyer. You will also run into problems refinancing it. Refinance mortgage loans require an appraisal and if an appraiser will have a hard time getting comparables to your home, you will have a difficult problem in refinancing your property.
If you decide to do a major home improvement to your existing home, it is fine as long as you do not over improve for your area. Having the best most expensive home in your area is never a good idea.
By Gustan Cho