Move vs. Renovate: How Do You Decide?

Start by sorting through the pros and cons of both.

If you're like most homeowners, that house you once loved will no longer be your dream home. You might have outgrown the home, or tired of the outdated kitchen, or gotten frustrated with the layout.

You're faced with a choice: move or renovate. But how do you decide which is best for you?

First off, do you like the neighborhood? If so, that's a good argument for exploring renovation. Do you love your house, despite its flaws? Is there room on your lot to expand? Those are other good arguments for renovating.

On the flip side, if your daily commute is too long, or you're not thrilled with the neighborhood schools, those can be good arguments for moving.

Once you've figured out how you feel about your current neighborhood and home, you need to start thinking about the practicalities of renovating. Get a professional's opinion. Renovations might not be structurally or financially practical.

If you're leaning toward renovations, think about how you will pay for them. Do you have enough equity in your home to get a home equity loan or line of credit? Borrowing against your home generally has tax benefits, but you will have to pay closing costs of 1 percent to 2 percent.

Of course, you'll also have to pay closing costs if you decide to move and buy another home - and the loan is likely to be much bigger. You'll also need to factor in the cost and disruption of a move, plus real estate agent fees.

Speaking of disruption, though, anyone who has lived through a major renovation knows that means big-time disruption. The dust, noise and inconvenience can drive just about anyone batty. For really major renovations, you might even need to move out of the house for a few weeks or even months, jacking up the cost.

Other hassle factors to take into consideration:

• Moving: You're uprooting your family, asking the children to make new friends and probably go to a new school. Your new neighbors might be great, or they might have an endlessly barking dog and a penchant for late-night parties.
• Renovating: You'll probably need to navigate the world of local building permits, no one's idea of a fun time. You also might find it difficult to predict the final cost of a renovation project. The one rule of renovations is that something unexpected always happens.

Other positive factors to consider:

• Moving: You can buy a house that has just about everything you wanted.
• Renovating: You can create your dream house yourself.

Are you sensing a theme? The truth is, there's no one answer to the question of moving vs. renovating. You'll have to weigh the pros and cons and figure out what works best for you.