Even after a buyer has found the perfect starter home, it may eventually no longer meet the buyer's needs and wants. Homeowners may consider moving to a move-up, or step-up, home. Reasons to sell and buy a move-up home include:
  • An additional income-earner has joined the household
  • A growing family and the need for more space
  • The kids have moved away and it's time for a smaller, more refined house
  • A promotion that comes with a better salary and benefits package
  • The current home's value has significantly increased
Current and Future Needs
Many first-time home buyers are not in a financial position to making buying decisions based on future needs. A young couple, for example, may want to eventually start a family, but the home they can afford now would be too small for the kids. When homeowners are in the financial position to move-up, they may be able to take both current and futures needs into consideration.

It is important to remember that just because a buyer can afford (on paper) to purchase within a certain price range, that less expensive homes can still be on the radar. Just because a person can spend more money doesn't mean he or she has to.

Financing a Move-Up Home
Homeowners will have to consider the financing options when purchasing a move-up home. If the existing home has not sold yet, buyers can choose a home equity loan or a bridge loan to make the down payment on the new home.

Equity Loans
A home equity loan allows homeowners to borrow against the equity in the home. The loan is based on the difference between the homeowner's equity and home's current market value. Home equity loans are usually less expensive than other loans.

Bridge Loans
A bridge loan is a short-term loan that is used until the homeowner secures permanent financing. These loans "bridge the gap" between financing sources, such as while the owner is waiting for the existing home to sell. Since these loans are short-term, they may have relatively high interest rates.

Next: Homebuyers' Walkthrough: Homes For Retirement »


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