How Fort Wayne Move-Up Buyers Can Use Home Equity for Their Next Home
Buying a Home · From Moving Fort Wayne
How Fort Wayne Move-Up Buyers Can Use Home Equity for Their Next Home
The average person stays in a home seven to nine years, maybe ten. That means many of the families Charity Middleton helped buy their first homes are now ready for their next one. Charity, who calls this her 13th season in real estate, joins host Brad Noll on Moving Fort Wayne to talk about move-up buyers and how they can win in today's market.
Brad frames the conversation around the lock-in effect. He says about 80 percent of people with mortgages have a rate somewhere between 2 and 4 percent, and many feel stuck because of it. To help, he and Charity share three tips: leverage your equity, move before the floodgates open, and play the long game.
Charity also points out something easy to miss. A move-up buyer may be purchasing for the second or third time, but it might be their first time selling. So the episode speaks to first-time sellers, too.
What Is a Move-Up Buyer?
For Charity, it always comes back to a pain point. Someone bought a home when it was just them, then married and started a family and outgrew the space. Someone else started a business and now needs an outbuilding for equipment. "That move up buyer to me is just some sort of lifestyle change has happened," she says. It is not always about size, either. Sometimes buyers want different features or amenities for their stage of life.
She sees many people stay in that first home six or seven years. Some stretched it to ten because the market felt intimidating, even while they were busting at the seams.
“That move up buyer to me is just some sort of lifestyle change has happened, and they're ready to move on to the bigger home or even more amenities of a home.”
Charity Middleton
Tip One: Leverage Your Equity
Brad says the number one reason the team is helping move-up buyers is equity. "If you bought a home five years ago, there's a good chance you've got $100,000 worth of equity," he says. Charity shares a real example. A young couple bought a three bedroom, two bath starter home in 2016 for $150,000. This year she helped them sell it for $268,000, and they walked away with $130,000 in equity. That let them put 20 percent down on their next home, around $400,000, and still have about $50,000 left to save, invest, or put toward improvements.
Other buyers make different choices. Some put all their equity toward the down payment to keep their monthly payment close to what it was. Others use equity to pay off student loans, buy a car, or invest. Charity has used a home equity line of credit to buy investment property herself. Brad adds a clear caution: the team are not financial advisors or attorneys, and no one should treat their home like an ATM. The point is understanding what you qualify for and how equity can work for you.
That is why Brad asks buyers how they think about money. Are they focused on price, payment, interest rate, or down payment? Is this a five year home or a ten year home? The answers change the advice.
Buying Before You Sell
The first step is always pre-approval. The next question is whether a buyer can carry two mortgages at once. Many people do not realize that is possible, though VA buyers can only have one VA loan at a time. If buying first is not an option, a contingent offer may be. Charity walks through the tools and strategies she uses:
- Get pre-approved and find out whether you qualify to own two homes at the same time.
- Ask lenders about bridge loans and other products that help free up equity.
- Open a home equity line of credit before listing, since it usually cannot be opened once the home is for sale.
- Negotiate a later closing date to give your current home time to sell, ideally closing back to back on the same day.
- Prepare your current home ahead of time, including photos and staging, so it can be listed the moment you go under contract.
- Put a smaller down payment on the new home, then use a recast once the old home sells.
Brad explains the recast. After your old home sells, you put a lump sum toward the new mortgage, and the bank recalculates your payment on the lower balance while keeping the same interest rate. He says most banks charge a couple hundred dollars, compared with a couple thousand for a refinance. It is a useful tool even for homeowners who are not moving but receive a bonus or a gift.
Tip Two: Move Before the Floodgates Open
Brad is careful here. "If anybody ever comes to you and says, now is the right time, they're probably trying to sell you something," he says. This tip is only for people already thinking about moving up. For them, conditions are worth a look. At the time of recording, Brad says Allen County had a little over two months of inventory, the most homes for sale in six years, and rates were close to 6 percent. He has heard that every 1 percent drop in rates lets about 1.5 million more borrowers enter the market. If that happens, inventory could tighten and prices rise again.
Charity is honest with sellers. This is not a COVID market, and a neighbor's sale from two years ago may not reflect today's price. A seller might get a bit less than they would have then. But on the buying side, there is room to negotiate on price, inspections, or a rate buy down that buyers have not had in a while. "We cannot time this market," she says. The most important question is whether a family can comfortably afford the move. If not, her advice may be that it is not the right time.
Why Does Playing the Long Game Matter for Move-Up Buyers?
Brad believes waiting for rates to fall can backfire. Buyers forget about appreciation. If a $500,000 home grows even modestly over five years, the payment and down payment both rise. He and his wife bought a home 18 years ago that felt too big at the time, and building wealth there over the long term has been the best thing they did as move-up buyers. He has refinanced several times over those years to keep the right loan structure, and he warns against buying a home based on what you hope rates will do.
Charity's own story follows the same path. Brad was her first real estate agent. She and her family rolled equity from their first home into a second and then a third, and later used a home equity line to remodel their kitchen. She asks the same questions every family does as kids grow and life changes. Brad's closing summary: over a lifetime most people move three or four times, and those who hold their homes and make wise, strategic moves can win in the game of real estate.
▶ Listen to the full episode
Unlocking Equity: How Your Home Can Fund Your Next Move, on Moving Fort Wayne.
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