{"id":12311,"date":"2019-09-18T12:59:31","date_gmt":"2019-09-18T19:59:31","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=12311"},"modified":"2026-03-18T05:20:50","modified_gmt":"2026-03-18T12:20:50","slug":"guide-to-upgrading-from-starter-home","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/guide-to-upgrading-from-starter-home\/","title":{"rendered":"A Step-By-Step Guide For Upgrading From Your Starter Home to Your Dream Home"},"content":{"rendered":"

You\u2019ve started to notice the signs<\/a> that it\u2019s time to upgrade from your starter home. Your space is feeling cramped. Your family\u2019s growing but your home isn\u2019t. And you\u2019ve made some smart financial moves that have put you in a good position to trade up.<\/p>\n

Of course, selling a home and moving into a new one can feel like an overwhelming process. And you want to do it right. To help, we\u2019re breaking down steps with helpful tips to make the upgrade process more seamless:<\/p>\n

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Step 1: Make a budget and determine your family\u2019s needs<\/h2>\n

If you\u2019re starting to get serious about putting your house on the market and searching for your dream home, then setting a budget and evaluating what\u2019s important to you and your family is an important first step.<\/p>\n

The following are a few important things to think about during the planning stages:<\/p>\n

Get an idea of how much your home will sell for<\/b><\/h3>\n

A top real estate agent<\/a> can perform a market analysis and give you a ballpark idea of what your house will sell for based on similar sales nearby. Or, you can try your hand at HomeLight\u2019s home value estimator tool<\/a> which gives you a data-backed real-world valuation for your property.<\/p>\n

Keep in mind, though, that your listing price isn\u2019t the profit you\u2019ll walk away with when you sell your home. There are costs associated with selling a home, including agent commissions, transfer taxes, closing costs, and the expense of preparing your home for sale.<\/p>\n

These selling costs will eat into your profits, and unfortunately they don\u2019t come cheap. In fact, they can account for<\/a> up to 10% of your home\u2019s sale price. According to recent data from Zillow, the average cost to sell a home in the U.S.<\/a> is $20,851.<\/p>\n

Set a budget for your new home<\/h3>\n

As you\u2019re setting your budget for purchasing a new home<\/a>, give yourself some breathing room by planning for the unexpected.<\/p>\n

Unforeseen expenses<\/a> can arise in your closing costs. These \u201csurprise costs\u201d can include miscellaneous service fees, home inspection costs, and private mortgage insurance (for buyers putting less than 20% down).<\/p>\n

Further knowing property tax rates and planning for HOA dues will help you draw up a more accurate budget. HOA dues go towards maintaining common areas, so keep in mind that neighborhoods with pools, community buildings or gated fences will tend to have higher fees.<\/p>\n

Pull your credit<\/b><\/h3>\n

First thing\u2019s first: before buying a home, you should improve your credit score<\/a> as much as possible.<\/p>\n

The good news is, you don\u2019t necessarily need a perfect score to get a competitive mortgage rate. If you\u2019re hoping to score the best rate possible, you should aim for a credit score of 760<\/a> or higher.<\/p>\n

Also, some of the free, third-party credit reporting agencies tend to inflate your scores, or they may not give a complete picture of your credit profile. For that reason, it\u2019s best to get your official credit score<\/a> that includes reports from all three major bureaus. You can pull your scores for free once per year.<\/p>\n

Get (or keep) your credit in tip-top shape<\/b><\/h3>\n

If you already have a strong credit score, the name of the game is to keep it that way. If your score could use a little work, we\u2019ve got some tricks for bumping it up<\/a>.<\/p>\n

Because credit can be fickle, you\u2019ll want to keep your score as stable as possible while you\u2019re going through the mortgage approval process. You don\u2019t want a small move to cause a credit score drop.<\/p>\n

For example, if you\u2019re planning on buying a new home in the next few months, don\u2019t take out any new loans, like a credit card or car loan. Taking on more debt can affect your debt-to-income ratio and might cause a dip in your credit score.<\/p>\n

Also, you\u2019ll want to keep your credit balances below 30%. When you go over that threshold, it can signal to creditors you\u2019re overextended. According to FICO, a widely used credit-scoring system, credit utilization makes up 30% of your score<\/a>.<\/p>\n

Pro tip:<\/b> Check with your credit card companies to find out what dates they report to the credit bureaus. You might be surprised to learn it\u2019s not always the same date your payment is due. When you know this information, you can make sure your card utilization stays under 30% and creditors know you\u2019re using credit responsibly.<\/p>\n

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Source: (Matt Rich\/ Unsplash)<\/figcaption><\/figure>\n

Apply for a conditional approval<\/h3>\n

In today\u2019s competitive real estate market, it helps to set yourself apart as a highly qualified borrower. Pre-approval letters are a good first step, but getting one doesn\u2019t exactly guarantee that you\u2019ll secure financing<\/a>.<\/p>\n

That\u2019s because pre-approvals are often based on self-reported or incomplete financial information. By doing your mortgage underwriting upfront<\/a>, before you even shop for a home, you can show home sellers you\u2019re a serious buyer who\u2019s ready to close.<\/p>\n

You\u2019re still in the planning phase, so now is a good time to gather up your financial documents like tax returns, pay stubs, bank statements, and investment statements, and have an organized folder ready for the mortgage approval process. You\u2019ll be far more prepared and ready when it comes time to mortgage your dream home.<\/p>\n

Make a wish list<\/h3>\n

One of the main advantages of upgrading is that you don\u2019t have to make as many compromises. You can have a big walk-in closet and spacious kitchen without knocking a large back yard from your wishlist.<\/p>\n

Now is really the time to hone in on your list of musts: Do you want to live near a golf course? Do you want to shorten your commute to work? Will you need a space for a home office because you\u2019ll be starting your own business or working from home? How about that Pinterest-worthy bathroom with a generous bathtub to relax in on self-care Sundays?<\/p>\n

Put it on the wish list!<\/p>\n

Consider school districts<\/b><\/h3>\n

For many families, school districts are of prime importance. Your real estate agent will have a good idea of what neighborhoods feed into great schools.<\/p>\n

If you\u2019re looking to do some research on your own, though, here are a few questions to ask yourself in the process:<\/p>\n