It used to be that when your home no longer fit your lifestyle you would by another home that better fit your needs. The market was a frantic sellers market so it made sense to buy your next home first, and then sell your old house. In today’s market however this process has many more risks and for some with the with credit requirements tightening it’s impossible.
Assuming that a move is not motivated by wanting to live in a different neighborhood, the natural outcome of this is that people are remodeling in order to create a home more suited to their needs. The need for more space can be solved by either remodeling unfinished space or adding on to the existing structure to add a bedroom or bathroom.
One danger in doing this is possibly improving the home beyond the character of the neighborhood which means that when it comes time to sell the investment n the remodeling will not be recovered in the sale. Consulting with your contractor in order to get an idea of cost and feasibility is advisable.
The next step would be to have your real estate agent perform a market analysis on your property both in its current state and also as though the work had been completed. If the cost of completion is much greater than the anticipated increase in value you may want to reconsider your plans. As in my previous blog entry you may also want to look at the “Cost vs Value Report” which can be found here.
http://www.remodeling.hw.net/2009/costvsvalue/national.aspx
The next issue to deal with certainly is where the money is going to come from to finance the remodel. With tight credit today and the depressed real estate market you may find that you don’t have enough equity in your home to obtain an equity line of credit to finance your project. Check with your mortgage broker before solidifying your plans.
If it becomes impossible to accomplish the remodel you may have to buy another home in order to obtain that better fit for your lifestyle. Remember that you may not be able to get what you want for your home but the home you buy will also be subject to the same slow market so anticipate the fact that with interest rates being at an all time low you may be able to buy a lot more house for what you are now paying in house payment.
You may want to see what homes are on the market now to give you a sense of what might be available when you do sell. This will hopefully give you a sense of security that you will be able to find a desirable home once your home sells. As a last resort consider the possibility of renting on a short term basis.
There have been many changes in the lending practices and many of the previous methods of financing are either no longer available or very difficult to get such as “negative amortization”, “stated income”, and “zero down payment” so check with you lender to see if these changes impact your ability to finance your move.
In Closing; If neither a major remodel nor that move is possible now have your real estate agent and lender keep you apprised of changes in the market which might make your move possible in the future.
Possibly Related:
{ 0 comments… add one now }