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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.

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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

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Anna found us a realtor who is a friend of a friend. I’ll reveal her name when all transactions are complete. So far, this realtor has been nothing short of great. She’s communicating with us constantly via email especially if she finds a property that we may be interested in. She’s taken the time to arrange viewings of potential properties (some nice, some not so nice, some far, some really far) even into the evenings.

After having done a comparative market analysis, our realtor set a list price on our home that actually took us by surprise; it was higher than we were expecting. But after looking at recent listings and sales in our area for comparable units, it seems our place is priced just right to attract the right amount of attention.

Our realtor has uploaded our listing and pictures to all realtor computer systems (MLS, mlxchange, RealtyLink, etc). Our open house is scheduled for this Sunday.

In parallel to this first step of listing our place, I’m also in contact with a mortgage broker to pre-approve us for a mortgage for our new place. Our new place will most likely be more expensive than the place we have now so it’s in our best interest to know just how much the bank will approve us for so we can stick to houses we can actually afford. Once we receive notice from the broker, it’s off to some serious house hunting we go. Once our place sells, we can make offers without a “subject to sale of purchaser’s property”.

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