The Vince Files » house hunting

We bought a new house!

Vince — Sat, 11 Oct 2008 16:41:29 +0000

Well, everything’s still verbal at this point. We offered, they counter-offered, we countered their counter and they’ve accepted. Our agent is still waiting for the paperwork from the selling agent.

The bidding went like this:

We offer at 92.6% of list price. They counter-offered back at 97.7%. We counter-countered at 94.7% and they’ve accepted. We’re just waiting for paperwork. Anna will accompany our realtor and home inspector next week at the new home.

Timelines are tight, stress is high, moving is a major pain-in-the-a$$ but we’re super happy we got the place. It really shows well and we’re pretty sure the owners took care of the place.

[UPDATE 10/17/2008]: I just stopped by our realtor’s office with the certified cheque for our deposit. Anna and I have signed the addendum to remove subjects after the satisfactory home inspection, mortgage application, and title search. The deal is firm! Just waiting for lawyers to complete the transactions.

[UPDATE 10/22/2008]: We just stopped by our lawyer’s office to sign papers. Wow! That law office is like a well-oiled machine. They had all paperworks ready (in triplicate!) for our signatures. The lawyer split our session into 2 parts: a) the sale of our old home and b) the purchase of our new home. He described every single document we were signing and believe me, there were many. With such tight timelines, I’m hoping everything goes through OK. Fingers are crossed.

Sold!

Vince — Thu, 09 Oct 2008 15:47:58 +0000

Perhaps I blogged too soon about receiving an offer on our place. But I can now say that the buyers have removed their subjects. The deal is now firm and the place is now sold!

We got an offer!

Vince — Thu, 02 Oct 2008 19:46:39 +0000

After 5 months on the market and a really slow summer, we have our first offer.

Offer comes in for 97.7% of our asking price, we countered up to 98.4%, they counter-countered back down to 97.9%. We accepted their offer. We really don’t want to let this one go.

It looks like the buyers are in a similar situation we were in a few years back; two parents with child in an apartment condo. They need to upgrade to more room.

So now, we’re busy talking with our mortgage broker, the bank, and our realtor to help us find a new place. Things are gonna happen real quick, real soon.

We’ve lowered our price

Vince — Sat, 28 Jun 2008 06:14:56 +0000

We’ve lowered our listing price by $10,000 to try to entice an offer from a potential buyer. We’ve been listed about a month with a couple of open houses, some private viewings and no offers yet. This is how the market is these days; many listings are staying on the market longer and longer.

Our updated listing is now on MLXchange and our real estate agent will be following up with people who left their names in our previous open houses to let them know. Hopefully something will come up soon. We’re aiming to sell, and buy another place before our mortgage pre-approval expires.

Canadian mortgage rates just went up

Vince — Fri, 13 Jun 2008 03:50:42 +0000

This past Tuesday, the Bank of Canada decided to keep their overnight rate unchanged at 3% despite analyst expectations of a 25-basis-point cut to help stimulate our economy. It seems the BoC now has its sights set on fighting inflation. How does this affect mortgage rates?

From the Bank of Canada site:

The Bank carries out monetary policy by influencing short-term interest rates. It does this by raising and lowering the target for the overnight rate.

The overnight rate is the interest rate at which major financial institutions borrow and lend one-day (or “overnight”) funds among themselves; the Bank sets a target level for that rate. This target for the overnight rate is often referred to as the Bank’s key interest rate or key policy rate.

Changes in the target for the overnight rate influence other interest rates, such as those for consumer loans and mortgages. They can also affect the exchange rate of the Canadian dollar.

This rate affects banks’ prime rates. Banks’ variable mortgage rates are based on prime. Our current variable-rate mortgage happens to be at prime less 0.75% (currently 4.00). Fearing the end of rate cuts and the start of the fight against inflation (monetary policy dictates raising rates to fight inflation), I decided to ask our mortgage broker about 5-year fixed rates. He was able to get our lender to pre-approve us for a 5-year fixed rate of 5.15% – a 1.5 percentage-point discount off their posted rate of 6.65%.

Then just today, the major lenders increased their 5-year fixed rates a full 50 basis points. Our lender increased its posted rate from 6.65% to 7.15%. Assuming a discount of 1.5 percentage points off the posted rate, our rate would have been 5.65%. This half-percent difference would have cost us $9,000 in interest payments over the 5 year term based on our principal balance and payment frequency (*)! I’m feeling so good now! Thanks to Anna and Wayne for hinting at possible rate increases and getting me to think about locking in. With gas and food prices skyrocketing, it’s nice to have some sense of certainty.

Our pre-approval is good for 4 months so it’s time to kick our house-hunting up a notch.

* A good Excel-based mortgage calculator can be found here:

http://www.vertex42.com/Calculators/Canadian-mortgage.html