Thread: update-python-to-the-new-version-3-9
Generally, as the prior response indicates: if you don’t want to deal with this once a year, go with a Docker install. Otherwise the linked thread has a few tips on how to upgrade python, use separate venvs for alternate python/home assistant installs, etc.
Another good tip from the thread is to limit the python version to the latest being used in the Docker builds (which as of right now is NOT 3.9 as requested in the linked thread).
As to your first question, I have my home assistant setup in /home/homeassistant and my venvs are set up in /srv/venv/homeassistant_(python_version). I point systemd to the correct venv and config, so other than backing up prior to any major changes (always wise) you don’t need to reinstall any config.