I talk with clients at important times of life: The birth of a new baby, when older children return home, and about elderly parents and other extended family needs.

A common question for families managing change is, “Should we add on to our home or move?” If you are facing that very important decision, take the following questions under consideration:

Have you built substantial equity in your home?

Look at your annual mortgage statement and compare it to the current market value of your property. You don’t build up much equity in the first years of a 30-year mortgage, as most of the monthly payment is interest, but if you bought your property before 2005, there is a good chance you have equity appreciation and a source for a down payment to use for the new purchase.

Has your income or financial situation improved? If your income has increased substantially, a higher mortgage interest deduction can provide an attractive tax shelter. Ask your CPA if a move up makes financial sense.

Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same area you want to settle in for good. An area closer to your job, with a better school district, or that offers more community amenities might be trade-up goals. Look around to see if your neighbors are improving their properties, or are more “for rent” signs appearing.

Are there reasons why you cannot or should not add on? County or city building and planning codes may restrict the amount of square footage you can add depending on your lot size, or prohibit a second-story addition.

And you want to be careful not to create the biggest and best property in your neighborhood when other homes are considerably smaller. You will limit future appreciation if you over-improve for the area.

Finally, is attractive mortgage financing available? With interest rates at historic 40-year lows, you can lock in savings for the long term.

Talk with a Realtor to discuss the logistics of trading up to achieve your housing goals in 2013.

— Adriana Donofrio, Podley Properties Glendora, adrianad@podley.com