Compare the pros and cons of buying a new home versus renovating an old home

Deciding whether you and your family want to buy a new home or renovate an older existing home is a big decision. Is it better to renovate an older existing home or to buy a new one? The long and short of it is, it depends. One option may be better than the other based on your specific home, budget, and location.‍ Read on to learn more about buying a new home vs renovating your current one.

Should you renovate or buy a new home? Ask yourself these questions.

Location: Do you love your neighborhood or are you looking for a change? If you like the neighborhood you’re living in, you have the choice to renovate your home or buy a home in the same neighborhood. By renovating your existing home, you may have the benefit of keeping your children in their current schools, and not having to go through the inconvenience of moving far away. Of course, you could always find a new home in the same neighborhood if that is important to you.

Budget: Do you have the budget to purchase a new home? Will you make a profit from the sale of your current home that will help increase your budget? If not, you may want to consider making smaller investments into your current home by completing various renovation projects.
Long-term living situation: Are you going to need to buy a larger house in a few years anyway? Do you want to complete renovations on your home, even if by the time you are finished you may have to sell and move into a larger house to accommodate your growing family? If you are looking to increase the resale value of your home, then this may be a good idea either way.
Floor plan: Can you renovate your home without changing the floor plan? It costs less to renovate your home — almost 50 percent less — when you don’t change the structural elements.
Home value: Will renovations increase your home’s value? Some remodels and changes increase a home’s value, while others may not depending on your local market. You should always consult with a remodeling expert before you embark on big projects to see if they’ll add value.
Property taxes: Will a move to a new house in a new location affect your property taxes? Will a larger and more expensive home increase your tax liability? Property taxes vary by county, and moving into a new house has tax implications that you may want to consider before making a decision.
Mortgage payments: Has your credit score increased dramatically since you first qualified for your mortgage? How do market rates compare to the market rates when you signed your existing mortgage? Buying a new home could mean a lower mortgage or a much higher one, depending on market conditions — you’ll need to see what real estate pros say. You could save money by purchasing a new home with a more favorable mortgage. Keep in mind that the opposite could be true as well.

Pros and Cons of Buying a New home vs Renovating

Once you’ve answered some of the above questions, you may be leaning more towards one decision than the other. Once you have started to explore these types of questions, you can then take a deeper dive into the pros and cons of either purchasing a new home or renovating your existing home.

Buying a new home rather than renovating

Selling your old place before searching for a new place can be a long, extensive process with an exciting result. And it can be both stressful and arduous if you don’t approach it correctly. Here are some of the advantages and disadvantages to weigh in the process:

Pros of buying a new home

A fresh start: Sometimes change can be a good thing and bring new opportunities for you and your family.
Income taxes: Selling your old home could save you money on your taxes because of capital gain exemptions.
Financing options: Purchasing a new house with a larger down payment generated from the sale of your current home can help you get a better interest rate on your mortgage, and save you money over time.

Cons of buying a new home

High costs: Selling a home involves closing costs, real estate agency fees, and other associated costs. Also, depending on the type of mortgage you get and how much your new home costs, you could be required to make larger monthly payments on your mortgage.
Moving: Moving is time-consuming and disruptive. Hiring a moving company may be in your best interest to save time;, however, it could be expensive, depending on the size of your move and how far away your new home is located.

Renovating your home rather than buying

Remodeling your home allows you to create new spaces, update its function to meet your needs and create an ideal space. Many homeowners update more traditional homes and renovate them with modern kitchens or bathrooms. By knocking out a few walls and updating a home with a more modern open-concept can make a traditional home feel completely fresh.

Cons of remodeling your home

The size of the remodel: If an old home needs a complete and major overhaul of everything, including structural elements, it could take more time than expected.
Financing: Even though renovating a home is not as expensive as buying a new home, you may still need to acquire financing to pay for your remodel. Whether that is a home equity loan, personal loan, or a second mortgage, each type of financing brings their own pros and cons.

‍Pros to remodeling your home

Lower costs: Remodeling your existing home is less expensive than purchasing a new home. Purchasing an older home with the intention of remodeling can also be expensive. Staying in your current home and remodeling allows you to pay for the renovations room-by-room. You may not need to remodel every room, and you can save money on your renovations by choosing which features you decide to change and which you leave as they are.
Customization: When you buy a new home, you generally have to accept the home as-is. You may not have the money immediately to do any serious remodeling. If you remodel your existing home, you can take your time to put your personal touch into the design elements of the renovation.

*Renovated living room and mantel by Curtis Bros Construction*

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