A lot of McKinney homeowners who would like a larger or better-fitting home begin the conversation with the wrong number.
They ask, “What can we afford to buy?”
I usually want to back up first and ask, “What do we realistically have to work with?”
For an established homeowner, the answer may be sitting inside the house you already own: equity.
Home equity can become the down payment on the next house, help reduce the next mortgage, preserve cash for improvements or make the transition between homes easier. But equity is not a magic pile of money hiding behind the drywall. You have to calculate what is actually usable—and then decide how much of it you want tied up in the next property.
Here is how I would approach that conversation with a McKinney move-up buyer today.
1. Start with net equity, not estimated home value
Suppose an online estimate says your home is worth $600,000 and you owe $250,000.
It is tempting to say, “Great—we have $350,000 to put toward the next house.”
Not quite.
Your usable proceeds depend on the actual sale price, mortgage payoff, transaction expenses, repairs or preparation you choose to make, and other costs connected with the sale.
So I prefer three numbers:
Likely sale price. Likely net proceeds. Conservative planning proceeds.
The third number is especially important. I would rather have a family discover at closing that they have a little more cash than expected than discover three weeks before closing that their entire next-home plan depended on an optimistic assumption.
Today’s market makes realistic planning especially important. In August, McKinney’s median listing price was $527,125, down 3.72% year over year, while the median sold price was $493,242. Homes sold about 1.07% below asking on average.
That does not mean your home is worth the median. It means we should price your home based on today’s competitive set—not what a neighbor received during a very different market.
2. Decide what job you want the equity to do
Once we estimate your likely proceeds, do not automatically pour every available dollar into the next house.
Ask what you need the money to accomplish.
It could provide the down payment. It could reduce the mortgage enough to make the monthly payment comfortable. It could leave a reserve for furniture, repairs, landscaping or a pool. It could preserve emergency savings instead of draining cash to close.
For some buyers, maximizing the down payment is the right answer. For others, keeping liquidity is more important.
This is where a good lender and, when appropriate, your financial advisor become important. My role is to make sure everyone is working from realistic real estate numbers.
3. Separate “can qualify” from “want to spend”
A lender may approve you for more than you actually want to spend each month.
Those are different questions.
A move-up home can bring a larger mortgage, higher property taxes, more expensive insurance, larger utility bills, HOA dues and more maintenance. A bigger backyard is wonderful until you discover it apparently has a landscaping subscription plan of its own.
Before setting the purchase price, build the payment backward from a comfortable monthly housing budget.
Then decide how much equity you would need to apply to the purchase to reach that payment.
That is much more useful than starting with the maximum loan approval and shopping until you hit it.
4. Model several down-payment scenarios
If you expect $250,000 in usable proceeds, run more than one scenario.
What happens if you put $150,000 down and retain $100,000?
What if you put $200,000 down?
What if nearly all of the proceeds go into the next property?
Compare monthly payment, cash reserves, mortgage insurance if applicable, interest expense and the improvements you expect to make after moving.
The goal is not to find one universally correct percentage.
It is to see the trade-offs before you sign a contract.
5. Be careful about using equity before the sale closes
Homeowners sometimes want to tap existing equity through a home-equity product or other financing to fund a down payment before selling.
That may be possible, but it changes the risk picture.
Additional debt can affect qualification, monthly cash flow and the amount of flexibility you have if the existing home takes longer to sell than expected.
There are also lending rules and product-specific requirements that need to be discussed with a qualified lender.
The important point is this: accessing equity and safely using equity are not automatically the same thing.
Build the financing structure before you start writing offers.
6. Understand your sell-first versus buy-first options
Using equity becomes more complicated when the money you need is still locked inside your current home.
One solution is to sell first and then buy. That gives you certainty about proceeds but may require temporary housing or a negotiated leaseback.
Another is to qualify to purchase before selling, then sell afterward. That can make the move easier but requires enough financial strength to carry the transition.
There are also bridge-style financing strategies and other lender products for some borrowers.
The right structure depends on your income, debt, reserves, tolerance for risk and the specific properties involved.
I do not think families should choose the sequence based solely on convenience. We should compare the financial exposure too.
7. Today’s McKinney market gives move-up buyers some negotiating room
McKinney had 2,567 active listings in August and a median 51 days on market. Realtor.com characterized the city as a buyer’s market, and homes sold about 1.07% below asking on average.
That can create opportunities for move-up buyers.
A home that has been sitting may have a seller more willing to negotiate price, closing timing, repairs or other terms.
But do not interpret “buyer’s market” as “every seller is desperate.” Desirable homes can still move quickly, and neighborhood-level conditions vary. In 75072, for example, median market time was 42 days in August—faster than McKinney overall.
Use leverage where it exists. Do not invent it where it doesn’t.
8. Do not over-improve your current home just to chase a higher sale price
When homeowners realize the sale proceeds will fund the next purchase, they sometimes become tempted to renovate aggressively before listing.
Be careful.
The goal is not to create the most beautiful version of your old house at any cost. The goal is to maximize net proceeds.
If spending $40,000 creates only $20,000 of additional value, congratulations: we have beautifully remodeled our way backward.
Prioritize repairs that remove buyer objections and improvements that make the property competitive. Sometimes paint, lighting, landscaping, cleaning and strategic repairs produce a better return than a major remodel.
9. Keep a transition reserve
Moving costs money even when the spreadsheet says it should not.
Movers. Deposits. Repairs. Window treatments. Furniture that mysteriously no longer fits. The refrigerator that your spouse insists the new kitchen absolutely requires.
I like move-up buyers to preserve enough liquidity that the first six months in the new home do not feel financially brittle.
If putting every available dollar into the down payment leaves no room for normal life, the down payment may be too aggressive.
10. Remember that equity is wealth—not just purchasing power
This may be the most important point.
Home equity is part of your household net worth.
Moving it from one house into another does not make it free money.
A move-up purchase should improve your family’s life enough to justify the additional financial commitment. Maybe you need another bedroom, a better work setup, more functional gathering space, a different school transition or a neighborhood that better fits the next decade.
Those can be excellent reasons.
But “we have a lot of equity” is not, by itself, a reason to buy a more expensive house.
Equity gives you options.
Use those options intentionally.
A simple move-up planning exercise
Before touring homes, write down five numbers:
- Conservative expected sale price of your current McKinney home.
- Estimated mortgage payoff.
- Conservative estimated net proceeds after selling expenses.
- Amount of proceeds you want to retain after the move.
- Monthly housing payment you would actually feel comfortable carrying.
Now take those numbers to your lender and build the purchase range from reality.
That conversation can save enormous frustration later.
The goal is not the biggest house your equity can buy
The best move-up strategy is the one that improves your family’s home without making the rest of your financial life worse.
McKinney’s current market gives buyers more choices and, in many situations, more negotiating room than they had several years ago. That is useful.
But the advantage belongs to the buyer who arrives prepared.
Know what your current house is realistically worth. Estimate the proceeds conservatively. Decide how much equity belongs in the next home. Preserve appropriate reserves. Coordinate the sale and purchase before you fall in love with a property.
Your current home may have helped build the wealth that makes the next move possible.
Treat that equity like an asset—not a coupon.
Kelly Vaughan
The Vaughan Team | Brokered by Keller Williams McKinney
Clarity, compassion, and a plan for what’s next.