Home Improvement

Love It or List It? How to Know When a Home Addition Makes Sense

Today’s homes have a tough time keeping up with their residents’ changing needs. Whether you’ve added children, changed work locations, or taken on hobbies, your home often takes the brunt. Suddenly, your living room is littered with plastic toys, and you’re begging for the sweet relief of a playroom.

If “bursting at the seams” is less of an exaggeration and more of a reality, you may need more space. But it can be tough to know when adding on is the right play or if packing up makes better sense. Aside from the cost, living in a construction zone can be a hassle. Yet searching for a new place can be time-consuming and stressful, especially with surging sales prices and interest rates. Here’s how to tell when breaking out the hammers is your best bet.

1. You’ve Got Serious Square Footage Needs

Assess what your current home offers and where its features list falls short. Sometimes, your reflection reveals that your oversized furniture is to blame. Other times, your concerns are confirmed: you need more space.

Walk through your home with a fresh notebook and jot down the issues you see and feel. Do so with abandon, even if your notes seem frivolous. Your frustration about too little storage is valid if it’s unlikely your bi-weekly warehouse trips will stop any time soon. Think about desired creature comforts, like a cozy home library where you can recharge away from the chaos.

Fortunately, getting more storage or a tranquil retreat may not require a change of address. As you make your rounds, take note of the hidden potential within your existing footprint. An unfinished attic or shed could become prime real estate with the right touches. Mini split systems can keep a newly enhanced space comfortable without the hassle of ductwork. While new flooring can instantly make an underutilized space feel like a perfect addition to your home.

2. Your Zip Code Is Prime

There’s a reason why the phrase “location, location, location” comes to mind when thinking about real estate. The location of a property has a lot to do with its value and your interest in buying it. Frequently, home search efforts drag on because buyers are focused on a particular area. And if the search for your current home was dictated by precise geographical boundaries, moving may not be an option.

If that’s the case, hang onto your desired location and all of its perks, especially if moving means making concessions. Even where there are challenges, like a high-maintenance yard, the irreplaceable benefit of your location may outweigh the hassle. School options, amenities, and other neighborhood features make a house valuable. Given that it’s such a significant factor, it makes sense to pay attention to the impact of your location.

Here’s the great news: investing in an addition may increase your home’s value over time. Added square footage has the biggest impact on how your home performs during home appraisals. And if you have unfinished square feet, a prime location makes it even more valuable to finish and furnish them. That’s especially true since such updates require less structural work.

3. The Funding Source Makes Sense

Dreaming about having more space is one thing, but paying for it? That’s where things get sticky. How you pay for your bigger space can impact how you get it. Funding an improvement with cash, using credit, or obtaining a loan can all provide benefits. Include a thorough review of the funding options you have before deciding on a project.

Since 2022, mortgage rates have far exceeded their sub-5% norms. This shift can be a determining factor in whether you add on as opposed to purchasing a new place. Research the latest rates available to borrowers with your range of credit scores for lines of credit. Skip requesting a rate approval for now, since doing so can add an inquiry to your credit report.

Consider the impact of managing a home equity line along with your mortgage payment. If you can swing the increased cost, you can pay for improvements as you go. This can result in less overall interest paid and won’t require a refinance of your total mortgage balance. When rates cool down, you can decide whether rolling your home equity line into a new mortgage makes financial sense.

4. You Have a Clear Vision

Look at your home’s features, inside and out, to shortlist your expansion possibilities. Exterior walls with open space on the other side can be great candidates for additions. Take note of details seen and unseen, like underground utilities or accesses, some of which may have code restrictions. List your findings for a future discussion with a licensed contractor.

Ideally, you’ll come to this future conversation with a clear idea of what you want from your addition. Pair your vision with your budgetary expectations to launch a productive discussion. While this may seem premature, it’s important to think through your long-term vision before you engage the professionals. Executing an addition is no small task, so being clear about what you hope to achieve is imperative.

Consider the addition’s potential return on investment. If your improvements fix only immediate needs, it may be an expensive endeavor. But if they give your growing family the option of staying put now and selling for a better price later, they’re worth the investment. Knowing what you hope to achieve can set you on the right path.

Striking a Balance Between Wants and Needs

Renderings of your newly expanded home can elicit a thrilling response, but keep the end in mind beyond pretty pictures. Structural essentials like total square footage, utilities, and connectivity are hard to change after the fact. While you don’t want to commit to double work, investing in structure over high-end finishes may offer the biggest benefit.

Keep your initial project goals as your true north throughout construction. Use them as a sounding board against which to weigh key decisions along the way. When you do, your completed project will be ready to meet the demands of your lifestyle, whatever they may be.

Leave a Reply

Your email address will not be published. Required fields are marked *