You’ve outgrown your home but hate the thought of moving. What are the pros and cons of remodeling vs relocation? Let’s start with the obvious. Remodeling would allow you to have the home you want and remain in the neighborhood you know and love. You’ll avoid paying moving costs and the stress that comes with buying and selling a home. Not to mention, if you like your neighbors and your commute to work is short, remodeling is an appealing option. But how will you pay for it?
After owning a home for many years, you are sitting on untapped money. By using a home equity line of credit to fund your project you will put your home’s value to work to increase its value. That’s just smart business. Even better, a HELOC will offer lower interest rates than most personal loans and credit cards. Yet there are some downsides to remodeling that you should consider.
When you apply for a HELOC your home is used as collateral for the loan. If you consistently miss payments, you could lose your home. You may encounter structural issues during the renovation that could increase costs. Termite damage, faulty wiring, outdated plumbing, asbestos, and mold can increase renovation costs by thousands of dollars. A renovation may take an estimated 6-9 months to complete but can take much longer.
In home building and remodeling, delays are expected. Applying and waiting for permits takes a while. A home addition may be delayed due to zoning laws. Materials may be late to arrive. The bottom line is, if you choose to renovate you have to understand that your house will be in disarray for several months to a year or more. Can you handle living in a home while work is being done? If that sounds stressful, you should consider relocating to find the house you want at a price you can afford.