You may be considering reevaluating your housing situation in light of rising home prices and increasing interest rates across the country. Should you use your equity from your home to finance a renovation or should you take advantage of the seller’s market? Should you buy a house or consider a home remodel?
This is a major decision that will be affected by your financial situation and lifestyle. These are some things that will help you make this difficult decision.
Are you happy with your current neighborhood? Do you find it difficult to imagine living elsewhere? A home remodel might be the best choice for you.
There are many financing options available: Personal loans, cash, securities-based lending, home equity loans, construction loans.
It’s sometimes less expensive to remodel than buying a house in Myrtle Beach. If you were to purchase real estate, you could avoid broker commissions and selling fees, which can reach as high as 6%.
You have more control over your space: You can choose the floor plan, appliances and paint colors.
These improvements can increase the value of your home. If you decide to sell, you might be able to recover the cost of these improvements.
Existing property may have physical constraints. Remodeling the kitchen can be a viable project for most homeowners. However, adding square footage to properties in dense areas may prove impossible.
Remarkable surprises and delays in construction: Rules and regulations can increase the cost of your project, and/or slow down the timeframe. Remodelers often discover hidden problems that can complicate the process and increase the cost.
Disruption to everyday life: Converting your home into a construction site can cause disruptions in your daily life. You may need to move elsewhere depending on the scope and size of your project.
Buy a House
Selling your home and moving to a better neighbourhood might be the best option for you.
If your new home is located in an area that is more desirable than the one you currently own, it may be a better long term investment.
You can get tax benefits such as mortgage interest deductions, provided your mortgage balance does not exceed the value of your home. Capital gains tax is not applicable if you reinvest the proceeds from the sale of your house in your next home purchase.
A new home is more likely to fit your lifestyle.
Rising interest rates: After a period with historic lows, mortgage interest rates are experiencing a steady increase, which can adversely affect your purchasing power.
It is expensive to buy a home.
Illiquidity: If you purchase a larger home, your money is more likely to be tied up in an asset that can’t be sold quickly for cash in an emergency.
How to finance the right option for you
Finance is an important part of the decision-making process. There are many options available, regardless if you decide to remodel or purchase.
Cash savings: This is a popular way to finance a bigger down payment or a project renovation.
Home equity loan, or HELOC: A lump-sum, fixed rate loan that lets you borrow against the equity in your home. HELOCs are similar to a home equity loan, but the interest rates can fluctuate making them less attractive in today’s rising rates environment. Both can be used to preserve cash and to finance home improvements.
Securities-based credit: This option allows you to use your nonqualified assets as collateral to obtain financing. It allows you to receive the funds you need to make a cash offer or earnest money, while still remaining invested in the markets.
Mortgage loans: Mortgage loans might be the right option for you, whether you are looking for a primary or vacation home, as well as an investment property.
What does it mean to remodel or buy a house?
A major decision in your life is whether you are buying a home new or remodeling an existing one. We can help you to find the best way to balance your financial goals with your long-term objectives and provide guidance on financing options to make your dream house a reality.
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Call Full Potential Real Estate, LLC now if you are thinking of buying or selling a house in Myrtle Beach.