If you like your neighborhood but your home is too small and you'd rather renovate than move out, there are four main points to consider.
First, talk to your real estate agent and determine a budget. This step is critical for everything else to fall into place, whether your current mortgage will be taken out by a construction loan, home equity line of credit, or you plan on using cash. A lot of people simply don't want to dip into their savings to pay for upgrades—they'd rather remortgage. If you remortgage from, say, $400,000 to $550,000, would you be able to afford that?
Next, look at comparable surrounding homes and what the neighborhood can support today and in the future to know whether you're over-improving your home or not. We once worked with a client who purchased their home for $600,000 and then did a $750,000 renovation, which was about $250,000 more than what the house ended up appraising for. A lot of details factor into a renovation this large, and many of the contractor costs are the result of changing—not adding onto—the square footage.
Also, figure out how long the renovation will take. Will you move out during the process or stay in the house? Either option is fine, just make sure you're educated and know what you're doing. Additionally, make sure you have the right team around you—the right lender, contractor, handyman, etc.
Generally, renovations take anywhere from three to 12 months, depending on the size of the house. If you're adding square footage, it will probably be close to a six-month project. If you're renovating just a couple of rooms, it will take closer to 90 or 120 days.
Lastly, make sure your Realtor has their eye on the building industry so they can recommend expert contractors that specialize in renovations. Renovation quotes can be all over the place, so get multiple quotes and make sure they're in line with what you're thinking of spending.
If you want to talk more about this topic or would like a copy of our how-to renovation guide, feel free to call or email us. We'd love to help you.