Move or Improve?
Home ownership is the goal of 9 out of 10 Americans and considered by many as the crowning achievement of the American dream(1). As a homeowner, one of the biggest decisions you may ultimately face is whether to stay in your home and remodel it—or move to a new home to meet your changing needs. NEFCU encourages you to consider the following when deciding to renovate or relocate:
Should You Stay or Should You Go?
Understand your reasons for change. Have you outgrown your current home? Need more room, or have an empty nest? Are the updates you seek better found in a new home? Has the neighborhood changed? Is it time to take advantage of lower interest rates? To help identify and itemize your needs, start with a list of what you like and what you don’t like about your current home. Then, create a list of improvements your home needs (in order of priority) and price them out so you can determine a rough budget for renovation. Finally, take a look at real estate listings in your desired area and get a good idea of what’s selling and at what price–and how much your dollar can buy you in a new home. Talk with a mortgage specialist at NEFCU, the credit union for better banking, about rates and purchase and refinancing options.
Good Reasons to Stay in Your Current Home
One of the key factors in deciding to stay or go is today’s economic outlook. The economy continues to show signs of growth and consumer confidence has improved. That confidence translates into job growth, wage increases and more consumerism. A good economy makes people feel good about the future and feel good about investing in home improvements. 2017 is shaping up to be a good year for construction with lower labor and building materials costs–both of which are forecasted to increase next year(2). Financing is affordable too; making 2017 a great time to take out a home equity loan or line of credit as home prices rise and loan rates remain relatively low.
Do the Math
If you opt for a remodel, compare your list of planned home improvements with those that generate the most resale value. Kitchens and baths traditionally offer the highest return on investment; 83% and 66%, respectively(3). The exact cost of remodeling your living space will depend on its size, the area you live in, and just how much of a face-lift it needs. Use the following as a good rule of thumb(4):
Low ($25,000 to $45,000): Interior and exterior painting, small repairs (like refinishing cabinets) and new landscaping.
Medium ($46,000 to $75,000): The low-cost upgrades above, plus a total kitchen renovation and bathroom upgrade.
High ($76,000 and up): Low- and medium-cost upgrades, plus fixing any foundation issues, roof and sewer line problems.
Financing Your Decision
Your home may be more than just a great place to live: it may be a great source of cash. In fact, your home’s equity–the difference between its current value and the amount you may still owe on its mortgage–can be used for a major renovation. Investigate both a fixed-rate home equity loan and a variable rate home equity line of credit to find the financing you need and can afford. NEFCU even offers a flexible home equity line that allows you to designate a portion of your line as a fixed rate loan, so you can enjoy the best of both worlds. Visit NEFCU at myNEFCU.org for details.
Good Reasons to Move
The same economic factors that make it palatable to stay and renovate your current home also make it advantageous to sell and purchase a new home. Low mortgage rates mean lower monthly costs, so now may be a good time to move in advance of any significant rate increases. While low mortgage rates help keep monthly payments low, housing inventory often determines options, cost and speed of sale. Many of these factors may benefit the seller. Carefully weigh your options and avoid overpaying for a home. Beyond economic rationales, a move to a new house also offers a chance for a fresh start–giving families the opportunity to bond in a new setting and neighborhood.
Money on the Move
If you’ve made the decision to move, you still need to plan and budget. Real estate experts estimate that the best time to sell your house on Long Island is winter–between December and March. According to real estate brokerage firm, Redfin®, February is the best time to list with an average of 66% of Long Island homeowners selling within 90 days. Smaller inventory during the winter months can help garner more than your asking price, and conversely, buyers find that sellers tend to negotiate more during the first quarter of the year. As the seller, be sure to allow for brokerage and attorney fees, transfer and title taxes as well as pick up/pay off fees to the title closer. If buying a single family home, allow even more in terms of budget for appraisal and escrow fees, bank fees, application, processing and recording fees, title insurance, mortgage tax, and any area taxes. The final line on your moving budget should also calculate packing and moving company fees.
NEFCU: Your Partner in Progress
Whatever option you choose–move or improve–your decision can benefit from input from a financial expert. As one of Long Island’s leading credit unions, NEFCU offers local expertise and affordable banking services for all Long Islanders. At NEFCU, you’ll find a full array of mortgage and home equity options to meet your needs–and at better rates and lower fees you won’t find at other institutions. Visit myNEFCU.org for details.
(1)National Association of Realtors, Gallup, NY Times/CBS News Poll
(2)Dodge Data and Analytics, National Association of Home Builders/NAHB
(3)Nationwide Insurance, Home Improvement Value
Content provided by Newsday’s Brand360 Department in partnership with NEFCU.The news and editorial staff of Newsday had no role in the creation of this content