Considerations for Building a New Custom Home vs Remodeling …
There are several options to consider when considering building a new home vs remodeling your existing home.
Depending upon your needs, remodeling your existing home can be a small, inexpensive project designed to add storage space or update fixtures, or a large, costly project that includes every room in your home.
Building a new home on the same lot as your current home requires demolishing the old home and an added cost. Building a new custom home somewhere else means buying land and deciding on what type of custom home to build.
Interest Rates
One of the biggest factors in the cost of remodeling or building a new home is the available interest rate.
Homeowners who choose to remodel can choose to fund the project from savings, a home equity loan or line of credit. The cost of borrowing depends on your borrower’s credit, the terms of the loan and interest rates. The same factors impact rates for acquiring a new mortgage.
Home Location
The cost of remodeling versus building also depends on the location of the home. Remodeling a home in a community with high property tax rates may increase your annual tax bill.
Building a new home gives you a choice of neighborhoods and land in an area where home values are lower, but likely to increase.
Green Home Design
Remodeling or building a new home is an opportunity to practice good Eco friendly home design, which can also save you money in the long run. A green remodel using energy-efficient appliances can increase a home’s value more than installing basic appliances.
Building a new home using high-efficiency insulation and energy-saving appliances and water-saving fixtures reduces average utility costs and will save you money for the life of your home.
Time Frame
The cost-effective decision between remodeling or building a new home is largely determined by how long you plan to stay in the house. Remodeling may be best for homeowners who either can’t afford to build a new home or plan to stay in the home for an extended period of time and want it to better meet their needs.
Building a new home, though more expensive, can pay off when homeowners sell before an adjustable-rate mortgage increases or take advantage of a rising housing market by selling a still relatively new home for significantly more than it cost to build.
