Many people dream of owning their own homes. But when they finally do, they find out that there are a lot more costs involved than the mortgage payment every month. There’s also all the work you have to put in to maintain it. And if you want your home to be worth as much as possible come sale time, then you need to keep up with repairs and renovations on an ongoing basis. In this article, we’ll explore some of the reasons why it might make sense for homeowners who can afford both options - to fix up or sell as is - to choose one over the other.
Selling your house
Find home buyers
If you need to sell your home and want to find a home buyer, the best route is to have a real estate agent help you find someone interested in buying your home. This way, you’ll know that they’re serious about purchasing the property, and it will also eliminate some of the risks of dealing with a stranger yourself. You can also list your home with various websites that deal with home buying/selling, but it might be difficult for these sites to match buyers with sellers when they don’t have any connection with them.
You could also decide to sell your home without the help of a real estate agent. Additionally, if it's important for you to sell your home as fast as possible you can use a home buyer to sell a house quickly. To better prepare yourself for this, you should read more about how home buyers work and the process of selling a house with them.
Find a real estate agent
If you're selling your home and you're not in a hurry, then one thing that you should consider is hiring a professional real estate agent to help sell it for you. This will be beneficial in the long run because they will know what they are doing and can assist with any other steps that you need to take. It's also good to have someone knowledgeable by your side when dealing with the buyers.
Real estate agents also make it their job to market and advertise your home. They will put up pictures and write a description that generates interest in your house. An agent can also do open houses for you, which is one of the best ways to attract potential buyers.
Selling the house on your own
Selling the property yourself is a good option if you need to move and don't want to deal with the process of trying to find a realtor and deal with the paperwork. It's also an option if you're trying to get rid of the property quickly for whatever reason. But in order to do this, you need to know that you won't net as much as if you had a realtor involved, that you'll have to invest your time, and that there are still some fees that will cut into your profits.
Furthermore, you must research different techniques for locating possible clients. For example, are you going to be using Zillow to advertise your home? If so, it's important to know that not everyone is found on this type of website or that there is no guarantee that everyone that is there will see your ad. Additionally, there will be fees for advertising services and you should be ready for them.
Fixing up your home
Raise the value of the home
There are many benefits to fixing up your home before selling it. One of the most obvious is that you'll be able to make more money on the sale because it will be in better condition. Of course, you will need to do the math first to determine if it will be worth your time and money to do the work, but you might discover that it makes more sense to put some sweat equity into your home.
Homeowners who usually spend their time working on things like painting, landscaping, and redoing the flooring are likely to see a return on their investment when they sell the home. For example, someone might have spent about $20,000 in renovations over several months to put an addition onto their home so that it will be more marketable. If they sold the house for $150,000 more than the average selling price for that area, then they would have earned a 5% return on their investment.
Fixing your home will make it more efficient
The fix-up may help with any cost-of-living issues with the property, like making it more energy-efficient or updating the appliances. If you sell your home and the new homeowner discovers that the oven doesn't work right or there aren't enough electrical plugs in a room, they might be turned away because it's not what they were expecting. But if you fix these things up before putting your house on the market, then you'll likely find that buyer after buyer is interested in making an offer.
Also, bad insulation can cause higher costs for your utilities, while new windows can help you save money on your energy bills.
Having a more appealing house will attract potential buyers
If your house is in good condition and looks nice from the outside, then people who would not normally consider buying it will take a second look. Of course, you also want to add value with landscaping and any other add-ons that might be attractive to buyers.
You'll need to do your homework when figuring out what potential buyers might want in a home, and if you make some changes that are appealing to the taste of most of the buyers in your area, then your house will sell faster and for more money.
How To Make Financial Sense When Fixing Your Home
When you remodel your home by making improvements like renovating your kitchen, adding an additional bathroom, or replacing your property’s exterior siding, you can greatly increase the value of your home; as well as improving its aesthetic and comfort. But if you need to borrow money to make those improvements, it needs to make financial sense. One of the best ways of remodelling your home in a way that makes financial sense is to go with a cash-out refinance scheme.
Refinancing Your Mortgage
Refinancing your mortgage to pay for the renovations you want to make is one of the best financial strategies available to you. Current mortgage rates, as of June 2021, are around 3.13% for a thirty-year fixed mortgage rate, 2.41% for a fifteen-year rate, and 2.63% for an adjustable-rate mortgage. You can use the excellent comparison site Moneywise to compare refinance mortgage rates from different mortgage lenders. If you are pursuing a cash-out refinance option for remodeling your home, you need to know what the refinance mortgage rate will likely be.
When you refinance your mortgage, you basically pay off the loan to your original mortgage lender and then use a new lender that has entirely new loan terms. That will typically include a new interest rate, which will ideally be a lower rate, as well as a new payment term and closing costs. If you are in a position where you have built enough equity in your home, you can apply for the cash-out refinance option. It basically means you borrow more than your original mortgage and then receive the difference at closing. The amount of equity you may borrow will vary from one lender to another, which is why it is important to compare different insurers, but most enable you to take out a mortgage that is up to 80% of the value of your home.
So, How Does Cash-Out Refinance Actually Work?
To help you understand the cash-out refinance option better, let us take a look at an example. If you purchased your home five years ago for a price tag of $250,000 and you made a down payment of $10,000, and your mortgage payments have reduced your existing loan to $200,000, your home would today be valued at $305,000. Seeing as the majority of mortgage lenders allow for an 80% loan-to-value ratio, it means you could potentially refinance your mortgage and get a new mortgage for $244,000. Your previous mortgage lender only needs to be repaid the sum of $200,000, thus leaving you with $44,000 to complete your home renovations. However, bear in mind that other factors will determine the precise amount, such as your level of debt, your income, and your credit score.
The Advantages And Disadvantages Of Cash-Out Refinance
While a cash-out refinance option is a great solution for remodeling your home, there are both advantages and disadvantages of cash-out refinancing. On the downside, your monthly mortgage payment will be higher and the repayment term will be longer. The latter also means you are paying interest on the loan for a longer time, which can add up over the years. A cash-out refinance can also mean you will be older than you initially thought you would be by the time you can completely pay off the loan. On the upside, when you use cash-out refinancing, the interest rates will typically be lower in comparison to the rates via a credit card or personal loan. And your monthly payments could be much more affordable because they are spread out over a longer time. But the best thing about the cash-out refinance option is you have the funds to improve your home and therefore add value to it.
Conclusion
It's difficult to know whether it's better for you to fix up your home or to sell it. That's a question only you can answer. However, in order to decide, you need to know the advantages of both options and we hope we provided that in this article.
Make sure to look for people's personal experiences online too - you can find many examples of readers who have been in the same dilemma and see what they chose to do in the end.
