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Should I Remodel Or Move?

Miranda Crace8-minute read

February 26, 2022


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After you’ve lived in your home for some time, you may realize it doesn’t have everything you need or want. Maybe it’s missing a playroom or first-floor laundry. Or perhaps it’s too small for your growing family.If you’re unsatisfied with your current home, you have two options: you can renovate it to meet your preferences or buy a new home that checks off all your boxes. The decision has two components: financial and emotional. We’ll take you through the factors to consider when it comes to finances first, then help you unpack the intangible aspect of the decision.

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How Much Does It Cost To Move?

First, let’s take a look at the costs associated with moving to a new home that suits your wants and needs. This option comes with several costs beyond the price of a bigger mortgage.

Costs Of Selling

In order to buy a new home, you’ll want to sell yours. Unfortunately, it generally costs around 15% of a home’s sale price to sell it. There are a number of potential costs involved in selling your home, including:

  • Agent commissions: approximately 5% of the sale price
  • Minor repairs and home preparations: $500 – $5,000
  • Major repairs: $20,000 -$50,000 (Many people do not need to factor in major repairs, but some older homes do require significant work, such as rewiring to meet housing/safety codes, before a sale
  • Title insurance: $2,000 – $4,000

What About The Capital Gains Tax?

If your home has appreciated in value from your original purchase price, you may be responsible for an additional fee called a capital gains tax.

Many people can get an exemption from paying the capital gains tax, as long as the increase in property value is not greater than $250,000. So that’s one thing you may not need to worry about!

Costs Of Buying

Buying a new home comes with expenses, including the following:

  • Remodeling, furnishing, and buying appliances: $8,000 on average
  • Closing costs: 3% – 6% of mortgage
  • Home appraisals and title insurance: $500 – $2,000
  • Holding two overlapping mortgages ($0 – $3,000, depending on how long the overlap lasts)

Costs Of The Move Itself

Whether local or cross country, a move comes with a price tag. You can expect to pay:

  • $2,000 – $5,000 for a cross country move
  • $80 – $100 per hour for a local move

The Costs Of Moving To A Larger, More Valuable House

If you are upsizing, your new house will likely cost you more. You should consider whether the following new expenses will apply to you:

  • Higher property taxes: 0.27% – 2.47% of property value, depending on location
  • Higher utility usage: variable. This will depend on the age of your home and the amount of green remodeling that has already taken place.
  • Higher cost of living neighborhood: variable. It is possible that your budget won’t increase by a cent. However, even groceries may be more expensive, and you may find yourself tempted to buy a new car sooner to fit in.

The Costs Of A More Expensive Mortgage

You may be able to get a new house that meets your new needs for the same price as your previous home, either because you’ve moved to a lower cost of living area, found a steal, or just needed something different but of equivalent value.

However, you may be looking at a significantly more expensive home, which doesn’t just mean a bigger down payment; a higher price tag can come with costs in the form of higher often interest payments as well.

You should also weigh the fact that you will be pouring hundreds of thousands of dollars into a new property. Although this is not necessarily money “spent” in the way interest payments and taxes are, as this outlay can function as an investment (and is often a very sound one), it can still result in a loss in net worth if property values plummet.

You should consider the following when you are weighing how much a new home will cost:

  • Higher interest payments
  • A greater percentage of your net worth is tied to real estate

However, if you can afford to pay more up front, you can offset this potential difference with a shorter mortgage term and/or buying mortgage points. You may also be able to get a better interest rate than the one you had for your previous home.

Moving: The Big Picture

Let’s say you have a house that you sell for $200,000. Assuming average costs, you would expect to spend about 30,000 to repair and sell your house and about $15,000 to close on a new house, move in, and furnish it to your taste. That’s a little under $45,000 of nonnegotiable expenses all told. 

That’s without considering the cost of moving to an area with a higher cost of living and of taking out a newer, more expensive mortgage.

All of these expenses should be taken into account, but they still may be well worth it! The same goes for remodeling. It certainly can be pricey, but the quality of life improvement has the potential to be enormous. 

How Much Does It Cost To Remodel?

According to Home Advisor, in the U.S. the average renovation costs $46,788. The typical range is $18,372 – $77,016.

You’ll want to carefully price out the following, getting multiple quotes and bids, and doing careful research on the costs of remodeling such as:

  • Permits: $60 – $500. Although every local municipality is different, yours will probably require a permit for remodeling projects such as window installation, plumbing work, structural changes, fencing installation, and electrical work.
  • Architectural planning: $2,000 – $8,500. If you have a larger, more complex remodel, it’s wise to hire an architect who can plan it out for you.
  • Labor: $20 – $150 per hour. If you don’t have the skill, time, or desire to DIY your remodel, you’ll have to contract it out.
  • Materials: Material cost varies so widely that we can’t put a price on this.

Tip: Experts suggest that you add 20% onto your initial budget to account for unforeseen problems and costs.

Costs For Popular Remodeling Projects:

The following statistics come from data collected by Home Advisor:

  • Cost to remodel a kitchen: $4,000 – $60,00.
  • Cost to remodel a bathroom: $4,000 – $55,000.
  • Cost to remodel a basement: $11,000 – $30,000.
  • Cost to build a home addition: $21,000 – $70,000 on average but can reach $125,000. 

The Costs Of Financing A Remodel Through Loans

You may be able to cash-out refinance for home improvements if you have equity in your home. Other options include a home equity loan, a home equity line of credit (HELOC) or a personal loan.

However, these methods will come with many of the same costs as purchasing a new home, including:

  • Closing costs: 3% – 6% of mortgage
  • Interest rates: 2.8% – 6% of the loan (get in touch with a mortgage expert for current HELOC, cash-out refinance, and home equity loan interest rates to be sure!)

The Costs Of Making Your House Larger And More Valuable

If you are upsizing via a remodel, your remodeled house will cost you more in many of the same ways as if you had moved. You can expect the following new expenses:

  • Higher property taxes: 0.27% – 47% of your property value, depending on location. An assessor will likely learn of your changes and alter your property value for tax purposes.
  • Higher utility usage: variable. This will depend on the age of your home and the amount of green remodeling that you include in your remodel.


If you are hoping that remodeling will add value to your house, you should carefully consider what types of remodeling projects will actually add value. You should be aware that many trends go in and out of style and will not be guaranteed value-adds.

You should also take heed of the fact that the value of many houses is capped. You should talk to a real estate agent to find out what they believe to be the maximum value property in your neighborhood can reach. Make sure that your remodeling work does not exceed that value.

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Remodel Or Move: Considering Comfort, Sentimentality And Other Intangibles

It’s time for a look at the pros and cons of remodeling compared to moving from an emotional perspective.

Pros Of Remodeling:

No need to change your lifestyle: If you move, you may have a longer commute to work and your kids may have to change schools. With a home addition, you can continue with your current lifestyle.

Complete customization: You can customize the addition to meet your exact needs. You’ll have the freedom to choose your materials and fixtures and bring your dream family room, garage, or primary suite to life.

Cons Of Remodeling:

Living through a major project: You may find it a hassle to live through a major project like a home addition. This is particularly true if you have kids or pets.

Pros Of Moving:

New environment: Buying a new home can give you the chance to build a life in a new environment. If you’re in need of a fresh start, it may be a good option.

Larger space: If you don’t think a home addition can fulfill your need for a larger home, a new home may be able to.

New floor plan: A floor plan can truly make or break a home. If your current floor plan doesn’t work well for your family, a new home with a better floor on may be just what the doctor ordered.

Cons Of Moving

Lifestyle changes: Unless you’re lucky enough to find the perfect home in the neighborhood you already live in, you may have to change your lifestyle via a longer commute, new schools, etc. You'll need to take all of those into consideration when deciding where to live.

Leaving behind memories: If you’ve lived in your current home for a while, you may not want to leave the place where you’ve celebrated many milestones and created happy countless happy memories.

Consider All Your Options

Your home is likely one of your largest assets. So, it’s important that it meets your unique lifestyle needs. If it doesn’t, think about all the options at your disposal and carefully weigh the pros and cons of each.

You may find that moving and following our home buying checklist is the best choice for you or your family. Or you may realize that working with what you have and remodeling or adding an addition is the better option. Remember that there’s no right or wrong answer. It depends on what you’re looking for and what’s most important to you.

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Miranda Crace

The Rocket Mortgage Learning Center is dedicated to bringing you articles on home buying, loan types, mortgage basics and refinancing. We also offer calculators to determine home affordability, home equity, monthly mortgage payments and the benefit of refinancing. No matter where you are in the home buying and financing process, Rocket Mortgage has the articles and resources you can rely on.