Home Buying in McLean>Question Details

Marc M., Home Buyer in 22101

in this economy: should we refinance to: 1) buy new house,2) add a 2nd story or 3) get lower monthly payments?

Asked by Marc M., 22101 Mon Oct 3, 2011

In today's economic market, what is best to refinance for:
buy new house,2) add a 2nd story or 3) get lower monthly payments?
1) buy new house, (for $200K more that our house's value)
2) to add a 2nd story (for $200K)
3) or refinance to get lower monthly payments?

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Answers

13
Marc,

My colleagues below have given some fine answers..and of course it all depends. If you got a bid for 2nd story of 200k..bank on it being about 20% more..and being a nightmare! I don't know too many people including myself who would want to go through that again. Yeah it's nice when it's done..but the time and inconvenience involved typically will not be worth the expense.

IF your house is perfectly salable now..and has the buyers' hot buttons covered..updated kitchen and baths and decent floor plan..then take advantage of the market conditions..The lower priced homes are still moving quicker than most of the higher priced ones..so that should help..one thing my colleagues did not mention..is the selling and buying costs..you should perhaps consider this as part of the big picture.

Should you need some assistance or have further questions..more specific..feel free to contact me.

Kind Regards,

Erik J. Weisskopf, ABR,CDPE,CRS,GRI
Erik@AskMeAboutHomes.com
703.216.1222
1 vote Thank Flag Link Tue Oct 4, 2011
wow, that's really an impossible question to answer without knowing more about the specific market, your ideal goals, and what you really want to do. If you bought a new house would you have to sell the one you own now? Ideally, do you want to stay in the home you now own? as you know, it's all about location, location, location. Does it make sense to increase the size of your hime in the neighborhood in which you now live? If you're only after lower monthly payments, the simplest/easiest way is to refinance, but how long do you plan to live in your current home? Have you talked to a lender to have them run the numbers for you? All good questions, that lead to a lot of good answers, but with so many pieces to the puzzle, there is no simple answer. I hope this is somewhat helpful. I'm here to try to help you work through the best decision for you and your family. Call me anytime! 703.919.7761
1 vote Thank Flag Link Mon Oct 3, 2011
All of the above, refinance your home, lower your payments, add that 2nd story and sell your home for 250 more and buy that dream house. and put that 50 you saved into your kids college fund.
1 vote Thank Flag Link Mon Oct 3, 2011
It would be nice to know what happen to Marc and the direction he took.
0 votes Thank Flag Link Mon Dec 19, 2011
Hi Marc,
What is your current situation? Your decision needs to take several factors into consideration. Are you maxed out for space? How does your current home's value compare to the rest of the neighborhood? Will adding a 2nd story make your house the most expensive house in the neighborhood or will it put your house in line with the other homes? Lowering your monthly payments sounds like a great idea. Make sure that that your monthly savings for the period you plan to own your home, moving forward, are greater than the closing costs to refinance your house. I hope this helps. Feel free to give me a call if I can be of further assistance. There are many great opportunities in McLean.
Best Regards,
Paul
Web Reference: http://www.myagentpaul.com
0 votes Thank Flag Link Mon Dec 19, 2011
Hi Marc,

As you have probably gathered, a lot depends on your particular situation. Not knowing anything about your situation, in today's economy I would suggest buying a new home while home prices are still low. I dont think you will get the same bang for your buck when adding a second story to your home. Unfortunetly many home owners feel that if they put $200k worth of improvements in a home then it is automatically worth $200k more (which normally isn't the case). Your newer and larger home in McLean will more likely appreciate in value as the market improves. For example, if your current home is worth $400k and market values improve by 10% then you will gain $40k in equity; however, if you buy a home now for $600k and the market increases by 10% then you are now gaining $60k in equity. When you add current prices to what interest rates are today, it is a great time to use leverage and improve your buying power; as well as, making a great investment.
You can refi to get lower montly payments also; however, I would put whatever the difference is between your old payment and your new payment towards the principle of your mortgage. In essence the amount of money you pay each month shouldn't change, this strategy will help you pay your home off sooner.

Hope this helps.

Mo Hashem
Mo@HashemRealtyGroup.com
(571) 235-0021
0 votes Thank Flag Link Tue Oct 4, 2011
Today's market is great for buyers and not so great for sellers. If you need more room you should think about the addition. If you don't need more room just ref and lower your monthly payments.
0 votes Thank Flag Link Tue Oct 4, 2011
It really depends on your situation. Do you need a larger house due to a growing family or lack of space or you just want more space? If you expand your house, will your house be one of the largest ones in the neighborhood? Do you think you will be able to sell for the price you need in order to buy a larger house?

The interest rates are at all time lows so it is a good time to buy or refi, without knowing all the particulars of your situation it is hard to say which is the best move for you right now.

Please feel free to contact me if you have any more questions or need help.

Thanks

Melissa
mbarkalow@comcast.net
0 votes Thank Flag Link Tue Oct 4, 2011
1) You might consider buying the property in Tysons condos for investment
2) You can find out this coming sping next year. it is already too late for renovation currently
3) Yes, please find out no closing cost option for refinancing

Let me know if you have anymore questions
0 votes Thank Flag Link Tue Oct 4, 2011
There are so many possibilities that you must consider - that there is no right answer based on your information. Questions that you should think about?
1. If you increase the size of your house, how will it look for resale in your neighborhood?
2. How much will it cost you to refinance for lower monthly payments? How long do you plan to stay in your current house?
3. Will your payments be significantly lower?
4. Do you have children in school or other significant issues keeping you in McLean?
5. How much space can you get for $200,000 ? How much inconvenience are you considering?
6. Can you afford to buy a new larger, newer house in McLean?

If I can help you answer any of these questions, please call.
Sharon Nilsen
Associate Brooker
703 403-5504
Prudential Carruthers Realtors
0 votes Thank Flag Link Mon Oct 3, 2011
Marc,
My gut reaction is to suggest you sell and buy up. While the value of your home is down, the one you want to buy is down as much or more. Leverage is on your side if your desire is for a larger more expensive home.
Construction costs are down, but many remodels and additions don't return the expense of adding them plus the hassle of living through the mess for months or making other arrangements for a place to live.
A refinance costs money that you can put toward your new house & mortgage.
0 votes Thank Flag Link Mon Oct 3, 2011
To echo the other agents, it depends on what you need and what you want to do. It will not cost you $200k to add a second story - you can build an entirely new house - and then some - for that amount of money. So, I think your line of reasoning should be something like 1) buy a new house for $200k more, 2) add a 2nd story for $70k+/-, 3) refinance to get lower monthly payments. Now is the time to build since construction labor and materials are relatively cheap. Depending on your market, I would seriously consider option 2. If you just need more space, like your current home and the neighborhood, it may not make much financial sense to spend $200k when you may be able to get the space you want for $70k. I'm a professional investor, home renovator and Realtor. I'd be happy to take a closer look at your situation and make some suggestions based on values, expenses, and lifestyle choices. Feel free to contact me anytime.
0 votes Thank Flag Link Mon Oct 3, 2011
In all honesty, it depends on whether or not you need more space.
If you do not need any more space, then just refi and lower your monthly payment. If you do take a little money out, you could enjoy it by making improvements to your home that you can use and enjoy.
If you need more space, then it may be worht your while to either add a send story or buy a new home. That would have to be carefully studied, depending on your neighborhood and the comps. If your street can support the addition, and still get that money back when your sell, then it is a good idea. BUT if the comps do not support one home with a $200K addition, then it would make more sense to sell your home, and buy a larger one.

A lot to think about, so good luck.
Web Reference: http://www.myUSAhomes.com
0 votes Thank Flag Link Mon Oct 3, 2011
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