“Add On or Buy Another Home”
I am asked this question all of the time and there is NO perfectly right answer. Most folks ask the question because of the best way to get the money to do the addition, but the question is much deeper.
So often when this question comes up, the people really don’t want to move. They like the location and neighbors, etc.
The big issue is that by the time you spend the money for the addition; this may be the most expense home in the neighborhood and if the home needs to be sold in the future a sale becomes extremely difficult. It never fails. Folks will always say we are never going to move.
I never like being the most expensive home in any neighborhood but if it’s the right place for them and their family and there are no future plans to move, then I advise them to move forward with the addition.
Now, let’s address the financing. This can be a challenge. If folks have lots of equity in the existing home, there may be no issues. But if there is little or no equity, the mortgage part will be a challenge.
When there is plenty of equity a refinance of the existing mortgage or adding a home equity line may do the trick. When there is little equity and refinancing includes the cost of the renovations, the property needs to appraise for an amount sufficient enough to pay off the existing debt, plus the cost of the addition, which is often a problem as there may not be comparable sales to accomplish the right value.
If the numbers just don’t work as far as the appraisal goes, there really is no option. The sale of the existing home would be required and then the purchase of a different home that fits the family needs.
Image courtesy of Tiramisustudio/freedigitialphotos.net
Subscribe to my blog via Email:
Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294
Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.
Equal Housing Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing becuase of race, color, religion, sex, handicap, familial status, or national origin.