Should you remodel or move?
Your home doesn't fit anymore. Moving feels like the answer, but between selling costs, buying costs and trading a low mortgage rate for today's, it can take six figures just to change addresses. Here's how to compare honestly.
Reviewed by Shawn Way, NMLS #1007298★ 4.9 from 111 reviewsUpdated
Should you remodel your home or move?
Usually remodel, if you'd stay in the same area and the home can be changed to fit (more space, a better kitchen, an ADU): remodeling with a HELOC usually costs less, especially if you hold a low first-mortgage rate. Moving wins when the location is the problem, when the house can't become what you need, or when the remodel would cost close to the price difference.
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What moving really costs
- Selling costs: agent commissions, transfer taxes, title, escrow and repairs often total 6%–10% of the sale price.
- Buying costs: lender fees, title, escrow and prepaid items, often 2%–5% of the price.
- Moving itself: movers, overlap months, new furnishings.
- Your mortgage rate: a new loan is priced at today's rates, not the one you locked years ago, and on a larger balance.
- Property taxes: in California, Proposition 13 resets your assessed value to the new price (with limited exceptions for owners 55+ under Proposition 19). In Florida, the Save Our Homes cap resets, though some savings can be ported.
Use a free calculator, or get your HELOC rate from Shawn.
Example: the same family, two paths
A family owns a $900,000 home with $380,000 left on a 3% mortgage. They need another bedroom and a better kitchen.
| Move to a $1,100,000 home | Remodel with a $150,000 HELOC | |
|---|---|---|
| Transaction costs | About $63,000 to sell (7%) + $33,000 to buy (3%) + $10,000 to move = $106,000 | HELOC closing costs, often $0–$2,000 |
| First mortgage | A new, larger loan at today's rate | Keeps the 3% mortgage |
| New borrowing cost | Higher rate on the whole balance | About $969 a month in interest on $150,000 at 7.75% APR while interest-only |
| Property taxes (California) | Reset to the new price | Rise only for the added value of the improvements |
| Disruption | Two moves' worth of upheaval in one | Several months of construction |
The $106,000 spent to move buys nothing you can live in. The remodel's $150,000 goes into the house, and some of it comes back in value.
When moving wins anyway
- The neighborhood, schools or commute are the problem.
- The lot can't hold what you need, or zoning won't allow it.
- The remodel would cost close to the price difference between homes.
- Your current rate is close to today's, so you aren't giving up much.
- You'd be over-improving: the finished home would be worth far more than anything nearby.
When remodeling wins
- You love the location and hold a low first-mortgage rate.
- The fix is clear: an addition, an ADU, a kitchen or a reworked layout.
- You'll stay at least five to seven years, long enough to enjoy it and spread the cost.
How to decide in an afternoon
- Get a contractor's rough bid for the remodel.
- Ask an agent what your home would sell for and what the replacement would cost.
- Add selling and buying costs to the move, and compare the payments. HELOC payment calculator · Home affordability calculator.
- Check how much you can borrow. How much can I borrow?
Also asked
Can you remodel your home now and move later?
Yes, and many people do. Choose improvements buyers also value, such as kitchens, baths and added space, and keep receipts; they add to your cost basis when you sell.
Is a HELOC or a renovation loan better for a big remodel?
A HELOC is simpler when you have equity now. Renovation loans that lend on the after-repair value help when you don't. See HELOC vs. renovation loan.
Can a HELOC help you buy a new home before selling?
Yes. A HELOC on your current home can fund the down payment on the next one, which lets you buy first and sell later instead of waiting for the sale. See a HELOC while your home is listed.
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Sources
Official sources behind this guide.
- What is the difference between a home equity loan and a HELOC? · Consumer Financial Protection Bureau
- What you should know about home equity lines of credit (booklet, PDF) · Consumer Financial Protection Bureau
- Regulation Z §1026.15: Right of rescission · Consumer Financial Protection Bureau