Tim Magee
Keller Williams Realty South
600, 11012 MACLEOD TRAIL S. , Calgary, AB
P: 403-668-7336
F: 403-668-7349
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Time to Upgrade Your Home?

How would you like to live in a nicer/newer home, and have lower mortgage payments? Sound too good to be true? It's totally possible! Read on!

If you’ve been thinking about upgrading your home, you’ve come to the right place. BUT, we need to talk about the process first, because upgrading isn’t for everyone.

When we talk about "upgrading", it can mean a few things. It could mean that we’re considering renovating, replacing carpets, adding hardwood, a deck, or something along those lines. It could also mean that we’re considering selling our current home, and buying a new home that better suits our needs. For the purposes of this discussion, we’re tackling the second kind of "upgrade": selling your old home and buying a new one.

Now, not everyone will be in the same position of having to sell their existing home first. If you have sufficient equity in your current home or are flush with cash, you may be able to purchase a new home without having to sell the old one. This is a great position to be in, because it allows you the greatest flexibility in setting the terms for selling and buying. You may choose to keep your old home and rent it out to provide a positive cash flow, or just defray your mortgage expenses if you’re carrying a mortgage on the property. Or, you may choose to put it on the market and sell it after moving to your new home, so you don’t have to worry about keeping it in showhome condition for showings. You might also consider renting it while you are trying to sell it, so you get the best of both worlds: someone is paying you to live in a place that you are going to sell anyway.

Of course, each of those scenarios has comes with challenges of their own, and not everyone wants to be a landlord, even for a few months. Plus, having the available resources to keep one home while purchasing another is still a relative rarity for most people. So, if you are able to keep your current place while buying another, please contact me today and we can start working towards your dream home ASAP.

However, if you are like most of us, selling your current home is the first obstacle in moving up to your next home, so lets talk about that.

If you bought your home in 2005 or earlier, you probably have significant amounts of equity in your home by default. What I mean by this, is that your home appreciated in value on it’s own between when you bought it and now. Plus, you’ve been making mortgage payments on the place, and each mortgage payment adds a little bit to your equity in the property. You are able to capitalize on this accrued equity in your home by selling it and using the money you get to fund the purchase of your upgraded home.

Now, why did I qualify that statement by writing "2005 or earlier"? Without going into specifics, 2006-2007 saw some huge increases in home resale prices in Canada, and Calgary in particular. Then, 2008-2009 saw some decreases in home resale prices in Canada. So, just based on the timing of your purchase, you may or may not have enough equity to upgrade. The media generates a lot of sensationalist hype around this boom-bust cycle, so take their reports with a grain of salt. Each purchaser and seller is unique, so your situation needs to be evaluated on its own merits.

For instance, if you bought your average, single-family home in January of 2004, you probably paid around $217,000 for it. If you sold that home today, May 19, 2009, you would probably get around $341,000 for it, on average. This means you would pocket around $124,000 when your home sells. If you are considering upgrading your home, that $124,000 can be used as the downpayment on your new place. Even better, if the new home is less than $124,000 more expensive than your old place, your mortgage payment might actually be less than it was before! Pay less and get a nicer home... can’t beat that.

What steps do you need to take to make this happen?

Contact me. You need to find out what your home is worth in todays market, and each home is different. I can write in generalities here, but your home is unique, so I need to see it and compare it to what is on the market in your neighbourhood in order to give you an accurate evaluation. I’ll give you the straight goods on what you can get for your home, so you can start your upgrade with confidence.
Talk to a mortgage broker. A mortgage broker will help you figure out what you can afford based on your income and current debt-to-income ratios. This is invaluable information, because the mortgage broker will work with you to figure out how to get the most bang-for-your-buck, home-wise, whereas your bank might be more interested in keeping you tied to the same mortgage and home at the old, high interest rates. Your mortgage broker also shops around locally and internationally to find the best mortgages for YOU specifically, while your bank is limited to their corporate head-office guidelines.
Finally, make sure that upgrading is right for you. As your agent, I won’t be happy if you aren’t happy, so we need to ensure that upgrading now is right for you. Need more room for the kids? Want a bigger yard and a nicer neighbourhood? Want that double garage and hardwood floors? Those are all great reasons to upgrade. However, if you’re just wanting something different (but you don’t know what), or you’re sick of your neighbours, don’t upgrade (yet). You can’t control who becomes your neighbour, and not having some definite criteria in mind for your new place makes searching for a new home pointless and frustrating for us both. When you know what you want house-wise, and can be happy with any kind of neighbour, that is when you should think about upgrading.

OK, ready to upgrade? I’m here and happy to answer your questions.

Tim Magee - Keller Williams Realty South
600, 11012 MACLEOD TRAIL S. , Calgary, AB
P: 403-668-7336
F: 403-668-7349