Q. My husband and I are trying to decide if we should buy a $330,000 home in our neighborhood that, at 2,300 square feet, is twice the size of our current home (the monthly payment would be only about $50 more a month than our current payment), or renovate our old house using a home equity line of credit, then refinance at a lower rate and pay off the equity line.
The extra money we would need for the larger home's down payment would be around $25,000, and the renovation we'd like to do would cost the same. The renovation would up our square footage by 750 square feet and allow us to stay in our home for longer. We bought the home for $280,000 three years ago and have a private buyer who will give us what we paid for the home. Do you have any advice on whether buying new or renovating is wiser?
The second paragraph is very interesting. We are not sure why a house that is only $50,000 more would need an additional $25,000 down (unless the first property was with a 0% down loan). And finding a buyer willing to pay 2005 prices - that seems unbelievable. This may be one of those offers that never really materializes.
At least the answer is realistic - it advises to look at the closing and moving costs, the overall cost per square foot comparison, the ages of the properties, the overall economy. And the final statement is -
The bottom line: If you remodel your house instead of moving, you'll be able to get exactly what you want and will have total control over the final result. But given the costs, uncertainties and hassles of remodeling -- and the fact that you have a buyer in hand for your current home -- if I were you, I'd trade up.It would be interesting to find out how everything turns out... if this a real situation.