Moving / Second House Buying Help

Just looking for some advice from guys who have done it before, to see what the process is ahead of time so I have a bit of knowledge.

The home we are currently in, is our first home, made a handsome down payment, and carry a mortgage. Have been in the home for 5 years, and we've outgrown it, (starter home, now with all the toys and kids, we also pay for a storage unit, etc).

I have a realitor coming over today, to look over the house and give me an assessment as to what she would list it for if we were to list, just so I have an idea.

My Morthage is with TD, and the rest of my banking with Scotia, and then there's the offshore oil accounts etc.. Kidding.

Plan is, to get an idea of what they'd list at, meet with TD, and go over things, then meet with Scotia and see what they'd do to get me to move the mortgage over.

What I don't know, and would like to have a bit of knowledge before meeting witht he banks is how does a second home purchase work?

When you have a mortgage and want to move out of that house to another, do you have to make another down payment? do you sell home A, pay Mortgage A whatever is remaining you pay and close out then go new mortgage? or do they tack the remaining onto the back of the new mortgage etc?

The new home we're eying up costs about 2-3 times the home we're in now, (It's just htat much house, property, and brand new, combined with the market being up in this area)

The realitor said from when we bought this one, the market is up about 5% so I don't expect to lose money on the house.

Any insight would be appreaciated.

What you should try to do is match the closing dates for the sell/buy so you don't need a bridge loan between the two (if buy is earlier) or need to find a place to stay (if sell is earlier). Then *everything* gets done on the closing date. You get the cheque from selling and use it for the down payment for the purchase.

Re: mortgage - it makes life a lot simpler if your old mortgage and your new mortgage are at the same branch of the same bank. If you do need a bridge loan, they'll fix this up for you as well. Since it's unlikely your mortgage on your existing house term ends on your closing date, there will be a penalty on that - but if you also using that as your new mortgage, the bank *should* waive this penalty.

If I were you, I'd do the buy/sell with TD and get a 1 year mortgage and the switch to Scotia bank a year from now. The less confusion you add to closing day the better.

Go in to your bank and talk to their mortgage officer. Ask about bridge loans if you buy before you sell the existing home.

TR,

You may also want to look at a mortgage broker instead of simply a bank mortgage. Many times they can get a better interest rate than a bank. I have my accounts with TD but our mortgage was negotiated through my financial planner who also is a mortgage broker. I think we ended up with 1.5% less than what the bank's rate.

Dyth

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Originally Posted by werner.reiche

What you should try to do is match the closing dates for the sell/buy so you don't need a bridge loan between the two (if buy is earlier) or need to find a place to stay (if sell is earlier). Then *everything* gets done on the closing date. You get the cheque from selling and use it for the down payment for the purchase.

Re: mortgage - it makes life a lot simpler if your old mortgage and your new mortgage are at the same branch of the same bank. If you do need a bridge loan, they'll fix this up for you as well. Since it's unlikely your mortgage on your existing house term ends on your closing date, there will be a penalty on that - but if you also using that as your new mortgage, the bank *should* waive this penalty.

If I were you, I'd do the buy/sell with TD and get a 1 year mortgage and the switch to Scotia bank a year from now. The less confusion you add to closing day the better.

Go in to your bank and talk to their mortgage officer. Ask about bridge loans if you buy before you sell the existing home.

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To further what werner said,

Many people when they put an offer in on their second home provide as a conditional offer pending the sale of their house but your relator should know that.

Dyth

As Werner said, you want to try to get the closings on the same date. Once you find out what your place is worth and the price of the new place you are thinking of buying, I would approach TD to see what they will offer as far as rates, etc. You will want to be pre approved for the mortgage on your next home. They will use whatever equity you have in your current home (after adjustments like realtor fees, etc.) One you see what they will do for you, you can them go to other banks/lending institutions. If these other places offer you a better rate, allow you to get out of your current mortgage with no fees, etc, then go back to TD and see if they will match the other offers.
You may want to consider doing all of your banking with the same institution. Good luck!

I've bought and sold several.

Ok.

1. Your mortgage is tied to the property, so you need to close it when you sell, and obtain a new one.
2. See if you have any penalties for breaking it. If there are, you would be well served to stay with TD, as they will typically waive those if you take out the new mortgage with them.
3. You still need a down payment, but when you sell your home, you typically simply give your lawyer direction as to how much ( after commission) you wish to use. Obviously if you can have more than 25% down, you save money since no CMHC premium is required.
4. Unfortunately, if your market is only up 5% it will be a wash, since real estate commissions are typically 5%.

PM me if you have any questions, or need a hand.

Jason if you want to email or pm, do so. No real inclination to go into detail here.
Good thoughts from others thus far, there is no one, or best way to do it, only what's best/right for you depending on variables. You have or to weigh many things.

Banks will want to look at your TDS and GDS. Most banks have calulators on their websites these days.

As BBD said, when you move you either close your existing, or port it. Closing your existing can incur steep penalties. If you do close it, using any available credit room to make maximum allowable payments (double down, 10% or more etc) is advisable. In this manner you borrow against your credit (credit or home equity line) to pay down every penny you can...Then when you close and receive the funds from the sale, you pay off those loans....Basically you are using credit lines, for short term borrowing to pay down your mortage and reduce the penaltys.

Take some time today if you can to get a gauge on what homes in your area are selling for. Oldest trick in the book from real estate agents is to inflate the value of your home. "We will at 400,000 it will sell easy", when really it's market value is only 350,000, then when it doesn't sell fast, "we should lower the price". They do this in order to get you to sign with them for 90 days...Its getting the listing they want.

Not sure about your neck of the woods, but it's a sellers market (supply/demand) these days and has been for a few years. This swings things (usually, not always) with respect to who has the negotiating power. In short there are far more buyers, than there is inventory. Sellers wont accept a conditional offer from you (on financing or sale of your home), not when there are all kinds of buyers out who will go in firm.

On closing dates.
In my experience, it's always best to try to arrange closing the sale of your existing home, one week before closing on the purchase.
Yes, it means bridge financing.Not a big deal

That gives you a week, to get into the new place, clean it and start moving things in. Moving days are a biatch and very stressful at the best of times. Trying to close both on the same day can cause all kinds of stress and problems.

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Originally Posted by TurkeyRookie

Just looking for some advice from guys who have done it before, to see what the process is ahead of time so I have a bit of knowledge.

The home we are currently in, is our first home, made a handsome down payment, and carry a mortgage. Have been in the home for 5 years, and we've outgrown it, (starter home, now with all the toys and kids, we also pay for a storage unit, etc).

I have a realitor coming over today, to look over the house and give me an assessment as to what she would list it for if we were to list, just so I have an idea.

My Morthage is with TD, and the rest of my banking with Scotia, and then there's the offshore oil accounts etc.. Kidding.

Plan is, to get an idea of what they'd list at, meet with TD, and go over things, then meet with Scotia and see what they'd do to get me to move the mortgage over.

What I don't know, and would like to have a bit of knowledge before meeting witht he banks is how does a second home purchase work?

When you have a mortgage and want to move out of that house to another, do you have to make another down payment? do you sell home A, pay Mortgage A whatever is remaining you pay and close out then go new mortgage? or do they tack the remaining onto the back of the new mortgage etc?

The new home we're eying up costs about 2-3 times the home we're in now, (It's just htat much house, property, and brand new, combined with the market being up in this area)

The realitor said from when we bought this one, the market is up about 5% so I don't expect to lose money on the house.

Any insight would be appreaciated.

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Talk to more than one realtor. Some will do "comparables" where they research what homes recently sold for in your area to give you an idea what your property should be listed at for a reasonably quick and accurately valued sale. Guard against realtors that inflate what your asking price should be. You should have a reasonably accurate idea,yourself so you'll know if somebody is blowing smoke up your butt just to get the listing. If your current mortgage is transportable (should be if you're with TD) using your equity as a down payment with your current mortgage will be a snap. Your TD mortgage officer will show you how this works. Use a good lawyer. Also,jus some friendly advice. Use the KISS princple.(keep it simple,stupid) This is no time to be changing mortgage companies. You'll have time to research and change when your current mortgage comes up for renewal. Good luck.

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Originally Posted by trimmer21

Quote:

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Originally Posted by TurkeyRookie

Just looking for some advice from guys who have done it before, to see what the process is ahead of time so I have a bit of knowledge.

The home we are currently in, is our first home, made a handsome down payment, and carry a mortgage. Have been in the home for 5 years, and we've outgrown it, (starter home, now with all the toys and kids, we also pay for a storage unit, etc).

I have a realitor coming over today, to look over the house and give me an assessment as to what she would list it for if we were to list, just so I have an idea.

My Morthage is with TD, and the rest of my banking with Scotia, and then there's the offshore oil accounts etc.. Kidding.

Plan is, to get an idea of what they'd list at, meet with TD, and go over things, then meet with Scotia and see what they'd do to get me to move the mortgage over.

What I don't know, and would like to have a bit of knowledge before meeting witht he banks is how does a second home purchase work?

When you have a mortgage and want to move out of that house to another, do you have to make another down payment? do you sell home A, pay Mortgage A whatever is remaining you pay and close out then go new mortgage? or do they tack the remaining onto the back of the new mortgage etc?

The new home we're eying up costs about 2-3 times the home we're in now, (It's just htat much house, property, and brand new, combined with the market being up in this area)

The realitor said from when we bought this one, the market is up about 5% so I don't expect to lose money on the house.

Any insight would be appreaciated.

---

Talk to more than one realtor. Some will do "comparables" where they research what homes recently sold for in your area to give you an idea what your property should be listed at for a reasonably quick and accurately valued sale. Guard against realtors that inflate what your asking price should be. You should have a reasonably accurate idea,yourself so you'll know if somebody is blowing smoke up your butt just to get the listing. If your current mortgage is transportable (should be if you're with TD) using your equity as a down payment with your current mortgage will be a snap. Your TD mortgage officer will show you how this works. Use a good lawyer. Also,jus some friendly advice. Use the KISS princple.(keep it simple,stupid) This is no time to be changing mortgage companies. You'll have time to research and change when your current mortgage comes up for renewal. Good luck.

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I have done this a few times and helped out my mom recently with the same thing. First time ever she did it in her life. The mortgage stuff is covered off. They shouldn't charge you a dime of that penalty for closing your first mortgage if you are getting another one with them that will be much greater. They stand to make more money. If they get stupid about penalties say goodbye and shop around. I use a broker and variable. I agree with Jben hammer down the amount to lower the penalty and pay off with the sale. We did this on a condo.

About the realtor I'm with Trimmer. Shop around. Get at least three. Usually someone says "oh you should use my friend ...." which is fine but it shouldn't be final. Have the realtor tell you what they are going to do and for how much. Look at their portfolio and if they sell houses typically like yours. My wife's best friend is a realtor and we have never used her. I would but depends on the circumstances. We sold a condo at one point and used the top condo realtor for the area and she did awesome for us. I didn't know her from Adam but knew her name from nearly every listing in the area.

Good luck and enjoy the new place once you get past this stress.

Getting more than one realtor is a good idea. They will (should) check similar properties in the area to price yours. But ask to see the listings - the one realtor we've talked to (we're moving too) had comparison properties which didn't have the back yard we had, hadn't been kept updated and one had one less bedroom. You can access on online MLS service and do a quite a bit of your own homework here.

Sneaky things realtors do - lazy ones low ball the price so your place will sell itself - no work for them and they get a commission - albeit on a slightly lesser sale. Aggressive ones exaggerate your price to get you to sign with them, and in a couple of weeks, they'll be coming back suggesting you drop your price to something more realistic so it will actually sell. You really need to figure out what your place is worth for yourself so you can have an intelligent conversation with your realtors.

Just noticed I had it backwards on closing dates.
Take possession of the new home atleast a few days before the sale of your existing home closes. The extra interest you incur for owning two homes for a week is minimal.

When you sell/buy on the same day, you are vulnerable to late movers or "slow" movers (pucking the dog to drag it out), the movers can get held up waiting for the purchase to close. The owners may not be out of your new home until 4, 5,6pm....There's no guarantees you will get the keys to the new home before 6pm, etc. You can be under enormous stress to clean rooms (most people like to clean kitchen cabinets, the fridge at the minimum) etc, etc, etc, etc. Having access to the new home the day before or 7 days before is worth every penny.

TR
Looks like you have lots of input on how to go about mortgage and selling. I think you need to establish buying criteria too. Please be careful since the banks will always give you more mortgage than you need. My wife and I decided how much we wanted the new mortgage to be, then we went shopping for a house in that price range.
The last thing you want when you get into your new home is to realize you borrowed more for the mortage than you really wanted to and find that the planned renovations to make the new house your dream cost more than you can afford with a hefty mortgage payment. There are plenty of mortgage calculators. Fixed rates for 4-5 yrs are available at 2.99% or less.
Make sure you pay the cost of a home inspector. This is not a fishing trip for you to lower the cost of the new house. It is a means to identify issues that will cause you to back out of a deal (my own experience was a seller that had altered his septic field and felt that I should swallow the $18K to repair it)
Having a list with your bride of agreed mandatory and desirable options in the new house is a real good way to help reduce the stress and keep the real estate agent from trying to show you homes you have no interest in.
If you are considering doing anything to your existing home to make it more appealing, focus on the kitchen and the bathroom. Any upgrades here will give you most return on your effort and dollars spent. Remember, even if the house comes with a man cave, fully stock beer fridge, tools and a quad bike as part of the deal, if the wife doesn't like the kitchen or finds the bathroom 'icky' then there is no sale and a broken man in the driveway crying in front of the loss of his "dream cave"

I agree with the above and will add in

Negotiate with the broker on the commission, especially if they double end the deal (they represent the buyer and seller) They should take 2% off as they don't have to share the commission with the buyers agent.

Listing agents will work for 3.5 or 4 % if you agree to list at a price that will sell fast.

And get ready for their famous line "your first offer is always your best offer" We are currently have one property listed and the agent brought us a low ball offer and used that line on me. I went online and found her highest priced listing at 1.2 M and told I wanted to make an offer for 80% of the asking price. She said I was being ridiculous and the people would not even consider it. So I asked why she thought we would entertain an 80% offer and follow it up with "your first offer is the best offer" comment.

Also put in the agreement, that showings are only available per-qualified buyers , this keeps nosy neighbors out.

You might also want to consider 12 hrs notice before showings, to allow time to get the dog out of the house and clean up / put away stuff.

Have a mandatory sign in / sign out sheet

I could go on for hours...

One more thing, when the agent shows you other 'comparable" property in your neighborhood , don't just look at the listing prices, look at the actual sale prices of comparable homes. This is a lot closer to what you can expect to get.

And being a techie, don't forget to find out what internet services are available where you move to. It would suck to go from fibre to the home back to DSL or cable.

Your current house gets one chance to make a first impression, try to make it count. Things like cleanliness, removing clutter, new paint, etc.
Don't spend large amounts of money on any improvements on the house at this point as you will not likely recoup any of that money through the sale.