Compare the pros and cons of buying a new home versus renovating an old home
The debate of new home vs old home deserves careful thought and evaluation. There are several advantages to buying a new home and several advantages to renovating an old home.
If you purchase a new home, you may have to pay a premium and have additional costs on top of an expensive purchase price, such as window coverings, paint, appliances, and so forth. However, if you renovate an old home, you may encounter some of the same expenses.
So, which is a better investment? Ultimately, this will be for you to decide. Your evaluation will likely include several elements. Below, we will compare buying a new home vs an old home, and the costs to renovate an old home vs building a new one. Keep reading to learn more.
Is it better to renovate an older existing home or buy a new one?
Deciding whether you and your family want to buy a new home or renovate an older existing home is a big decision. One scenario may be better than the other based on factors like budget, location, and convenience.
For example, do you enjoy living in your current neighborhood? Are there a good number of houses for sale in the location you want? These questions and more are some of the things you may want to ask yourself before ultimately deciding whether you should buy a new home or renovate an existing one.
Here is an example of some of the things you may want to decide before diving into the advantages and disadvantages of either scenario.
- Location: Do you want to stay in theyour same neighborhood or are you looking for a change? By renovating your existing home, you may have the benefit of keeping your children in their current schools, and not having to go through the inconvenience of moving far away. However, you could still find a new home in the same neighborhood if that is important to you and if there are homes for sale.
- Budget: Do you have the budget to purchase a new home? Will you make a profit from the sale of your current home that will help increase your budget? If not, you may want to consider making smaller investments into your current home by completing various renovation projects.
- Long-term living situation: Are you going to need to buy a larger house in a few years anyway? Do you want to complete renovations on your home, even if by the time you are finished you may have to sell and move into a larger house to accommodate your growing family? If you are looking to increase the resale value of your home, then this may be a good idea either way. However, depending on the local housing market, you may need to evaluate whether orwhetheror not you can see a large return on your investment if you decide to remodel, or if it will ultimately be a waste of precious time and money.
- Property taxes: Will a move to a new house in a new location affect your property taxes? Also, will a larger and more expensive home increase your tax liability? Can you afford to pay higher taxes? A move into a new house has tax implications that you may want to consider before making a decision.
- Mortgage payments: Has your credit score increased dramatically since you first qualified for your mortgage? Are market rates currently at a low when compared to the market rates when you signed your existing mortgage? You could save money by purchasing a new home with a more favorable mortgage. Keep in mind that the opposite could be true as well.
Once you have started to explore these types of questions, you can then take a deeper dive into the pros and cons of either purchasing a new home or renovating an older or existing home.
What are the advantages of buying a new home rather than renovating an old home?
Pros and cons of buying a new home:
- A fresh start: Sometimes change can be a good thing and bring new opportunities for you and your family.
- Income taxes: Selling your old home could save you money on your taxes because of capital gain exemptions.
- Financing options: Purchasing a new house with a larger down payment generated from the sale of your current home can help you get a better interest rate on your mortgage, and save you money over time.
- High costs: Selling a home involves closing costs, real estate agency fees, and other associated costs. Also, depending on the type of mortgage you get and how much your new home costs, you could be required to make larger monthly payments on your mortgage.
- Moving: Moving is time-consuming and disruptive. Hiring a moving company may be in your best interest to save time;, however, it could be expensive, depending on the size of your move and how far away your new home is located.
Whether you choose to buy a new house, buy an older house to remodel it, or renovate your current house, the decision requires some serious planning.
What are the advantages of renovating an old home rather than buying a new home?
Pros and cons of remodeling an older home:
- Lower costs: Remodeling your existing home is less expensive than purchasing a new home. Purchasing an older home with the intention of remodeling can also be expensive. Staying in your current home and remodeling allows you to pay for the renovations room-by-room. You may not need to remodel every room, and you can save money on your renovations by choosing which features you decide to change and which you leave as they are.
- Customization: When you buy a new home, you generally have to accept the home as-is. You may not have the money immediately to do any serious remodeling. If you remodel your existing home, you can take your time to put your personal touch into the design elements of the renovation.
- The size of the remodel: If an old home needs a complete and major overhaul of everything, including structural elements, it could become extremely expensive.
- Financing: Even though renovating a home is not as expensive as buying a new home, you may still need to acquire financing to pay for your remodel. Whether that is a home equity loan, personal loan, or a second mortgage, each type of financing brings their own pros and cons.
- Construction: Remodeling projects bring construction. Construction can be disruptive to everyday life, especially when you have children, pets or multi-generational families under one roof.
What are the major differences between old houses and new houses?
Some of the major differences between old and new houses can be found in their architecture and design.
An older or traditional house may have design elements that were popular in the 19th or 20th centuries. Historic styles include Victorian, Colonial, Craftsman, and Neoclassical. Modern houses may have much more open floor plans, modern windows and lighting, and sleek and simple architecture.
Another difference is that a modern house may be move-in ready, whereas an older house may need some renovation or updates to make it livable. Also, a home inspection on an older property may bring some bad news and require necessary updates to bring it up to code, such as asbestos or mold.
Are new homes typically worth more than old homes?
On average, the price of a new home can often cost as much as 30% more than an old home. However, location is typically the largest influence on price, so an older home in a more established neighborhood in a city center could cost much more than a new home in a suburb where property values are lower.
Can you put a modern kitchen in an old house?
Yes, many homeowners buy older, more traditional homes and renovate them with modern kitchens. By knocking out a few walls and updating a kitchen with modern appliances, a modern open-concept kitchen can make a traditional home feel completely fresh.
Whether you decide to buy a new home or renovate an old home, you should enlist the help of a professional designer to create a functional and aesthetically pleasing space.
At Skipp, you can work with a kitchen designer virtually and from the comfort of your own home. Skipp allows you to visualize 3D design projections of your space. With the guidance of a professional interior designer, you can contribute input without losing your valuable time. Skipp has the knowledge and industry connections to help you save on your entire kitchen renovation, in just a few simple steps that will make renovating fun again..