Whether it’s because you have a growing family, you’re making a move for work, or a multitude of other reasons, the time will come for most homeowners to upgrade from their starter home.
And when that time comes — or, more likely, before it comes — you’re going to have some questions about how to navigate the process.
Terri Foster, a mortgage banker based out of Sioux Falls, is ready to ensure that you have a smooth home transition.
Read our Q&A with her below for guidance on upgrading from a starter home, and reach out to Terri when you’re ready to take the next step!
Before we get into the fine details of upgrading from a starter home, tell us a little bit about yourself.
I was the Branch Manager at the Bank’s downtown Sioux Falls location when they approached me about taking a Mortgage Banker position.
I made the leap and never looked back, and now I’ve been doing mortgage lending for 11 of my 25 years in the banking industry!
On the personal side, my hobbies include skiing, hiking, scuba diving, and reading. My husband and I have one son, who is currently attending South Dakota State University (my alma mater!).
Additionally, I have two stepchildren, Cydni and Taylor; a son-in-law, Sadmir; a daughter-in-law, Angelica; and a beautiful granddaughter, Thea. Here is our whole crew on a family hike:
Fun fact: You can also find me in this First National Bank commercial from a few years ago.
How long should homeowners stay in a starter home before upgrading?
There is no magic formula for when to upgrade, but the best time is when it’s right for you and your family. Let your life changes dictate when you make your next move.
It’s usually a big life change that almost forces you to make an upgrade, whether it be an addition to the family, a work move, or downsizing in retirement (just to name a few).
No matter what your situation, remember that planning ahead is key.
Is there a timeframe for how far in advance homeowners should start planning an upgrade from a starter home? And, what might that planning involve?
Start planning as soon as you start making money!
Before you purchase your first home, you should make the decision to be there for a minimum of five years. At the same time, start saving money religiously so you have six months to one year of income in a liquid account, like a savings account or money market.
That will give you the flexibility to sell your current home and have the equity needed for a down payment for your next home, plus some additional cash for the moving expenses.
When you sell your home, you’ll be paying commission to a realtor, fix-up costs for your existing home, moving expenses, and for new furniture — because we all know that with a different space comes new furniture.
Lastly, I don’t believe rates and market conditions should factor into your decision. When rates rise, prices tend to fall, and vice versa.
If planning to upgrade from my current home in the near future, should I treat my mortgage payments any differently?
There is always a benefit to paying more towards the principal on your mortgage if possible. The bottom line is: you will pay less in interest, which enables you to save more money for your next home.
What are the most common mistakes you see homeowners make when upgrading from a starter home? How can these mistakes be avoided?
The biggest mistake I see is homeowners looking for a home before they know if they can afford it or are even pre-qualified.
Take the time to sit down with a mortgage officer and see what you can afford, determine if you have the sufficient equity to purchase a move-up home, and get pre-qualified.
Should I consider making home improvements to my current house before selling?
Home improvements can make a huge difference in selling your home quickly and getting a better selling price.
This also goes back to planning in advance; make small improvements every year if your home needs it.
You can spread out those expenses, and, by doing that, it will be more enjoyable to live in your home.
Pay for everything in cash if you can. Do your research and know what adds value.
Some examples:
- Paint is inexpensive and gives your space a fresh look
- New flooring in the right areas makes a huge difference
- Don’t forget about landscaping and maintaining a nice lawn
However, I wouldn’t remodel to the point that you are taking down walls, moving plumbing, etc., unless you plan to live there much longer than five years.
Do you have any personal experience to share from your own home upgrade(s) in the past?
I knew that I wanted a ranch home with a full basement in a specific neighborhood for my next move, and I like to take advantage of different opportunities that present themselves.
I had a son in middle school at the time; he and his friends were growing (bigger), and my husband and I knew we needed our space!
One of my co-workers lived in a ranch home in the perfect neighborhood. The interior wasn’t exactly my style, but the outside was great, and it was in a perfect location.
I put a bug in his ear that if he ever sold his home to give me the first opportunity to buy it. When the time came, we were able to purchase the home.
No, it wasn’t perfect. So we painted, put in new flooring throughout, and changed a few light fixtures.
I’m not sure how long we will be in this home, so I chose not to remodel the entire kitchen. But, we added enough value and comfort to stay there for a long period of time or even sell it within five years and make a nice profit.
The moral of the story: if you have enough equity in your current home, look for the right location and good bones — but look past paint colors, flooring choices, and light fixtures.
Many times, you can hold back some of the cash from the sale and do upgrades to your new home. Usually, your move-up home is a longer-term investment where you can afford to make bigger changes.
How does the team at First National Bank help homeowners through a home transition?
We would love to sit down with you to help you plan for your next move!
Earlier is better, but make sure you speak to a mortgage lender before you start looking for that new home. I don’t want you to fall in love with a house and not be able to afford it.
What resources would you recommend to homeowners before and during the process?
I know I’m biased, but your best resource is a mortgage banker at The First National Bank in Sioux Falls. We are there to help you plan and give you sound advice, whether it’s for your first home or a move-up home.
Is there anything you would like to add?
Real estate can be a great investment if you do some planning and make smart decisions. We can help you with that!
If you want to get to know Terri Foster better or determine if she’s the right mortgage banker for you, learn more here. And to start your journey of upgrading from a starter home, give her a call at (605) 782-5713 or 800-339-1160, or reach out.
NMLS ID: 485031
