How to Buy a House

When you and your wife bought your house, you were newlyweds glad to qualify for the renovations melbourne loan in this starter home. It seemed huge with three bedrooms and two full baths after the apartment you had been sharing, and the back yard looked like it simply wouldn’t end. However, ten years and three kids later, the house now feels like it has gone through a shrinking ray. Toys, clothes, books, clean laundry, dirty laundry, and just a bunch of people make you wish for your apartment.

You sit down on the couch one night with your wife after the kids are asleep, watching the television that (you swear) has moved three feet closer than it was when you moved in (although it isn’t). You look at each other, and at the same time, you say, “We need a bigger house.” You have a couple of choices: if you really love your neighborhood and your location, you can make an addition to your home. If the house is structurally appropriate, you can add a second story, or at least a couple of bedrooms upstairs over part of the ground floor. If the back yard has enough room, you can add a couple of rooms in that direction.

Another option, of course, is to sell your house and move into one that already has that extra room. You get to keep the equity in your home, transporting it over to your new loan. You won’t get to stay in that old house of yours, but you won’t be fighting over each other to get around the house, and your kids can go back to having their own rooms — or you can have a guest bedroom or an office again! There are several reasons to think about buying as opposed to remodeling.

When should you remodel?

Have a realtor visit your house. If you are going to have to redo the kitchen and bathrooms anyway, to bring them up to date, you really might think about staying put and making the changes. While home prices have gone up between 14 and 18 percent over the past year, depending on which part of the country you live in, it’s important to remember that while that means you will turn more of a profit with the sale, it also means that the bigger houses you are considering are going to be more expensive as well.

When should you sell?

Housing experts say that you should estimate about 15% of the price of your new home as the cost to move in. This includes everything from commissions to a potential loss on selling your old home to the additional cost of borrowing more money for the new house to moving expenses. So if you’re looking at buying a $300,000 home, moving costs are around $45,000.

If you’re going to have to renovate the kitchen anyway, though, you really can’t count that, because you would spend that money in either event. If the addition to your home is going to cost you more than $45,000 in this hypothetical, then if money is the determining factor, then you should sell and buy the other house. One benefit of selling that you can’t put dollar value on is the fact that you won’t have to deal with the issues that can arise when you bring in contractors for an addition.

What if you don’t have the money?

If you don’t have the money to pay cash for renovations or to add significantly as a new down payment for a new house, but you are really tired of living in what feels like a shoebox, it is possible to refinance your mortgage and add the cost of the improvements to your new loan. If you have kept regular payments and still have solid credit, you can go to your lender and ask for refinancing. You might get a better deal, in terms of interest rates, from another lender, so it’s good to shop this around.