Should You Add Onto Your Home or Buy a New One? Here's How to Decide

In today's housing market, building onto your home could be the easiest way to upsize.

A friend of mine bought a starter home 10 years ago and has yet to upsize. Since her mortgage on that home was affordable, she pushed herself to stick with it longer than expected. 

But now, that friend is having a baby, and she's just plain out of space. And while she's been looking at homes in different towns in close proximity to where she lives now, there's just nothing out there she wants to buy or can swing financially.

As such, my friend is moving forward with an addition on her current home. It's an expensive project, and a complicated one, but at this point, she wants more space by the time her baby is due and has yet to find a suitable home to bid on.

If you're in a similar boat of needing more living space, you, too, may be contemplating an addition. But does it make sense to put one on, or should you just buy a new home altogether? Here's how to decide.

1. Which option is more affordable?

The decision to build onto your existing home versus buy a new one may boil down to cost. Get quotes from contractors and architects, if needed, to see what the cost of an addition looks like. Then, compare that to what you'll spend on a new home. If one number is a lot lower, you may get your answer right there.

2. Do I love where I live?

You may not feel particularly attached to your neighborhood, and so the idea of moving to another one may not be daunting. On the other hand, if you love where you live and have family and friends in town, you may not want to leave. 

Similarly, you might have young kids enrolled in your local school district, and you may not want to move to another town because of that. In that case, it could make more sense to move forward with an addition so you can stay where you are.

3. Does my home have features that are hard to find elsewhere?

Maybe your home features a fabulous outdoor setup with a multi-level deck, gazebo, and hot tub. Or maybe your home's interior is filled with artistic molding you know will be virtually impossible to find in another home. If you're worried you'll have to give up features you love by moving, then building onto your current home could be a better bet than moving to a new one. 

Know what you're getting into

Putting on an addition isn't for the faint of heart. In my friend's case, it means having to abandon her home for a couple of months and live with family while the work is being done. It also means running the risk of the project taking longer than expected or coming in at a higher cost than what her initial estimate calls for. In fact, she specifically chose to finance her project with a home equity line of credit, or HELOC, so she has more borrowing flexibility.

In spite of that, getting an addition is the right move for her, and it may be the right choice for you, too. Just make sure you know what you're signing up for if you opt to go that route.