BOSTON — Many homeowners feel trapped in their houses or condos. Either they have a great interest rate that they don’t want to give up or they can’t find another house to buy.
This situation is increasingly causing homeowners to ask themselves if it’s better to renovate their current home instead of trying to move to another one.
Megan Ahigian and her husband moved into their 1,500 square foot Walpole home in 2013 when they didn’t have any children.
The kitchen was cramped, and many items had to be kept in a spare bedroom.
But after the recent birth of their second child, they knew they had to do something.
“We had really been using the third bedroom as overflow storage so there was sort of a sequence of events that needed to happen in order to make room for the baby. Getting the kitchen to a place where we could fit more storage in it was really important,” explained Ahigian.
Trying to buy a larger house didn’t seem to make sense.
“When you do find them, you’re fighting somebody off for them, so we decided that we just wanted to stay here and keep our mortgage. We refinanced at an extremely low rate.”
“It’s not always that easy for somebody to go out and find the perfect house that suits all their needs,” said Brian Mahoney, an area manager with Salem Five Mortgage.
He says he’s been receiving an uptick in inquiries about financing renovations. “Far more than I used to.”
For smaller projects, homeowners often use a home equity line of credit, or a HELOC.
This allows them to keep their original mortgage.
Larger projects usually require a construction or rehab loan. This means a borrower is taking out a loan on the future structure. The homeowner takes out one new loan and rolls the old mortgage in with the new construction costs.
Mahoney says sometimes it is better to feel that you’re not competing with a lot of other people for the same property, especially if you like the school system or the neighborhood where you currently live.
Roslindale contractor Larry Bastianelli is seeing an increased interest in renovating. “Upgrading condominiums, adding on to houses because they don’t want to go near the new mortgage rates.”
Not all renovations are equal when it comes to recouping your investment, however.
According to “Cost versus Value for 2023″, a New England homeowner would get back 104% pm am HVAC conversion and electrification.
A minor kitchen remodel would return 84%.
A mid-range bathroom upgrade with fetch 58%.
A mid wood deck would cover 52% of it’s original cost.
Bastianelli tells his clients to make sure the bones of a structure are strong. “Make sure the skeleton is up to code because everything else is on the surface.”
Although Ahigian wanted to make sure her house worked for her family today, she was still thinking about the future.
“We did everything with re-sale in mind because you just don’t know what the future holds, and I don’t want to over invest in this home and make improvements that aren’t going to increase value.”
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