Move or Renovate?
The big question answered: Should you move or renovate in Metro Detroit MI area?
The last 18 months changed what many buyers are looking for in a home. Recently, the American Institute of Architects released their AIA Home Design Trends Survey. The survey reveals the following:
- 70% of respondents want more outdoor living space
- 69% of respondents want a home office (48% wanted multiple offices)
- 46% of respondents want a multi-function room/flexible space
- 42% of respondents want an au pair/in-law suite
- 39% of respondents wish to an exercise room/yoga space
If you’re a homeowner who wants to add any of the above, you have two options. You can renovate your current house or buy a home that already has the spaces you desire. Factors like: could determine the decision you make.
- A possible desire to relocate
- The difference in the cost of a renovation versus a purchase
- Finding an existing home or designing a new home that has exactly what you want. (versus trying to restructure the layout of your current house)
In either case, you’ll need access to capital: the funds for the renovation or the down payment your next home would require. The great news is that the money you need probably already exists in your current home in the form of equity.
Home Equity Is Skyrocketing
The record-setting increases in home prices over the last two years dramatically improved homeowners’ equity. The graph below uses data from CoreLogic to show the average home equity gain. Odeta Kushi, Deputy Chief Economist at First American, quantifies the amount of equity homeowners gained recently:
“Remember U.S. households own nearly $35 trillion in owner-occupied real estate,. Hoseholds have just over $11 trillion in debt. The remaining ~$24 trillion is in equity. In inflation adjusted terms, homeowners in Q2 had an average of $280,000 in equity- a historic high.”
As a homeowner, the money you need to purchase the perfect home or renovate your current house may be right at your fingertips. However, waiting to make your decision may increase the cost of tapping that equity.
If you decide to renovate, you’ll need to refinance (or take out an equity loan) to access the equity. If you choose to move instead and use your equity as a down payment, you’ll still need to mortgage the remaining difference between the down payment and the cost of your next home.
Mortgage rates are forecast to increase over the next year, and waiting to leverage your equity will probably mean you’ll pay more to do so. According to the latest data from the Federal Housing Finance Agency (FHFA), almost 57% of current mortgage holders have a mortgage rate of 4% or below. If you’re one of those homeowners, you can keep your mortgage rate under 4% by doing it now. If you’re one of the 43% of homeowners with a mortgage rate over 4%, you may be able to do a cash-out refinance or buy a more expensive home without significantly increasing your monthly payment.
First Step: Determine the Amount of Equity in Your Home
If you’re ready to either redesign your current house or find an existing or newly constructed home that has everything you want, the first thing you need to do is determine how much equity you have in your current home. To do that, you’ll need two things:
- The current mortgage balance on your home
- The current value of your home
You can probably find the mortgage balance on your monthly mortgage statement. To find the current market value of your house, you can pay several hundreds of dollars for an appraisal, or you can contact a local real estate professional who will be able to present to you, at no charge, a professional equity assessment report.
Get Your Home Buying & Selling Strategies in our E-Guide
Don’t muddle through the home buying and selling process. Buying a new home is a dream for all of us, and it’s an emotional and stressful process; it also involves the most significant financial transaction you probably will make in your lifetime.
Your Buyer guide
Your guide will help you buy your ideal home with confidence and save thousands in the process. You will be working with Selling Agents, loan officers, underwriters, title companies…1. Do you know the lingo? 2. What you should avoid after applying for your mortgage 3. Know your Negotiation Power 4. Get to know how agents think and handle negotiations if you find yourself in a multiple offer situation? 5. Read What they Right. Find out the answer by downloading your PDF E-book Buying Guide.
Your Seller Guide
Your guide will help you work through the selling process using the latest in high-tech market tools. Our goal is to separate your home from the competition, keep them focused on your house. The selling Guide is very detailed and works through step by step, so your guaranteed Top Dollar for your home.
Bottom Line to Move or Renovate
If the past 18 months have refocused your thoughts on what you want from your house, now may be the time to either renovate or make a move to the perfect home.
Peek into My Crystal Ball
As we move forward, it’s been challenging as we navigated through all the changes. Putting your dream of a new home on HOLD shouldn’t be one of them. Now more than ever, knowledge will be your negotiation power. There are 3 parts to making the most money on the sale of your property. 1. Know the Market You’re In 2. High Tech Digital Marketing 3. My Blueprint to Your 🔑 to 🏡 Selling Success. No 2 homes are alike, and agents need to 🛑 marketing 1 size fits all. It’s essential to separate your property from the competition. Equally important, you want to keep the buyer focused on your property and not get lost in the shuffle. Having a digital omnipresence on serval platforms is you 🔑 to your success.
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