# Needing some advice!!



## michaelman501 (Mar 1, 2012)

*mod please delete thread, thanks.*

Not quite sure where to start or who to contact in regards to my question. I know there are some very very smart people on this forum so i figured i am sure someone here could give me some great advice. I appreciate any help or advice any of you can give me, so thank you in advance. Here is my situation. My Wife and i both bought our townhome when she was 19 and i was 21. The purchase price was $219500, and we put $28,000 down which brought the total mortgaged amount to $196,000(which included CMHC fees, wish i could have avoided those) We have been at this residence for approximately 3 years now. Our remaining mortgage on the property is $184000. We have now outgrown our townhouse as its only a 2 beedroom, and now we have a 8 month old baby, and are wanting a second child and the place just isnt big enough for our needs. When we first bought the house we did about $10,000 in renos to update the place and replace the appliances.....The real estate in the area has gone up somewhat in value since we have purchased our unit. We listed our property 30 days ago today, and have been getting pretty much zero traffic and most of all no offers. We need to get out of this townhouse and get into a house with a yard. We listed our property for $254,900, and have now dropped to $249,900 and we are still getting no traffic. We want to get our of this place super soon, but we have all our cash tied up in our equity and so we do not know what to do. If this property does not sell, will we be able to buy a second residence and rent out our current one. Currently we have about $15,000 in TFSA and the rest of our money is in equity in the home. Our only debt is our mortgage and a vehicle loan for 30k. My wife and I have a combined gross income of about $75,000. If our place does not sell, we still would like to be able to go purchase a home so we can have more space. What are my options for getting a second mortgage ? Or am i able to pull the equity out of my home and use it for a down payment on another place ? The place i live right now rents for around the $1300 range. I am sorry if this whole post doesnt make sense. I just really want to get my family into a house, but feel stuck because i cannot sell my current place. I am sure many people have been in this situation before, so any input is really greatly appreciated. If i left out any important information please let m know, thansk so much.

Michael


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## Spidey (May 11, 2009)

First of all, congratulations for purchasing your first place at such a young age. Regarding selling/moving, my advice would be to slow down - I don't see the rush. Becoming overly-anxious to get into a new place can often cost you thousands if not tens of thousands. IMO renting your current place and buying another would be a bad idea as it would involve taking on too large of debt burden, not to mention the often stressful business endeavor of becoming a landlord at the same time you plan to have another child.

If you are getting no traffic, your place is probably either over-listed or poorly marketed. It's a common mistake to think that putting $10,000 into renos will increase the price of your property by that amount. Often the increase would be in the neighborhood of 10 - 50% of the reno cost. Townhomes in particular sell at very similar prices to others similar units in the same complex, regardless of what improvements you make. Your best bet is to find out what the last few similar places sold for and list your unit in that price-range.


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## the-royal-mail (Dec 11, 2009)

1. start getting after your RE agent some more - make them work for their 2.5%, bug them once a week if you have to

2. ask RE agent to take new photos

3. ask RE agent to relist

4. lower the price (you may have to do this several times until you get some attention)


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## NotMe (Jan 10, 2011)

Michael, relax. Without having seen your place, remember that historically humans have been raising families in very small spaces (like 7 kids + 2 adults in a 3 bedroom kind of house, and even that's luxury compared to earlier generations who lived without indoor plumbing, etc. Do not be in such a big hurry to have it all.

If the worst case scenario is that for a while at least your one kid + future baby have to share a room, well that's not so horrible (I did it with my older brother myself). A worse thing to do is leap so fast into something so big like a new house, and still have the old house to rent out. You do not want to be an accidental landlord, with two young children and I mean no disrespect here a relatively low income (high for your ages, but low if you're trying for at least a $300,000 house). Or to sell your house at a low price and then feel the squeeze of the new house every month. 

Do not rush this, or feel that you're failing your family (I'm reading that between the lines). You're doing fine as is, quite frankly.


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## iherald (Apr 18, 2009)

I agree with everyone that there is no rush. But to the selling price, where did you come up with $255 or $249? Have other houses in your unit sold for similar pricing?


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## Toronto.gal (Jan 8, 2010)

At only 24, you have already taken 3 giant steps [in as many years], but it seems that you don't want to slow down at all, which could get you in trouble if you're not careful, and what normally happens when you're continuously rushing things.


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## Four Pillars (Apr 5, 2009)

Lots of good advice so far. April/May is typically the best time to sell a house, so if you didn't get any action, obviously you are asking too much.

You need to drop the idea that you "need" a bigger house. No, you don't.

You would LIKE a bigger house and understandably so.

What you NEED to do is look at your finances and try to figure out how and when a bigger house can fit into your finances. Right now you are asking about the mechanics of getting a bigger house without considering anything else.


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## MoneyGal (Apr 24, 2009)

I typed something out before and erased it, but it looks like the conversation is starting to go where I was going before, so here are my thoughts on this: 

I personally would just be so incredibly uncomfortable with this amount of debt, given your plans for your life over the next few years, and your income and asset levels. You already have a relatively high amount of debt ($30K in car loans?!), very little other savings (no employer pension plans? you didn't list any other assets), and you are planning to have another baby. 

How will you cope with a (presumably) larger mortgage while your wife is on EI, and what is your plan for childcare once you have two children? Is she essentially going to be forced to go back to work but...is it possible her entire paycheque (or most of it) will be eaten up by child care costs?

You should take any and all advice received from strangers on the internet with a huge grain of salt (i.e., probably not at all). But personally I just look at this situation and react emotionally - there is too much risk and too much on the line for you to be taking on a bunch of new debt now. And the commissions you're going to pay (AND the CMHC insurance on the new place, presumably) -- so much sunk costs, so much friction on your path to wealth.


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## MoneyGal (Apr 24, 2009)

p.s. TRM, why was there no chorus of "emergency fund! emergency fund!" from you in your post? :biggrin:


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## Barwelle (Feb 23, 2011)

Hey Michael,

I like what other people have said. Who says you *need* a bigger house? Each kid doesn't have to have its own room. I shared a room with my brother until I moved out to go to college, and my two sisters shared a room as well. We probably ended up better off from it because we had to learn to respect each other's space and share a room. 

Think of all the extra things you can do for/with your kid(s) by staying in your townhouse instead of selling it, paying all those fees (again), and spending more money on a bigger place.

Now, if your kids end up being different genders, eventually you will want to look into upsizing, but while they are young, I wouldn't worry about it. Just keep paying down that debt... who knows, in a couple years, you may have to move to another city for work, then you'd have to go through the whole process _again_.


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## the-royal-mail (Dec 11, 2009)

Funny gal.

I did not feel that was relevant in this particular discussion. The OP is here because he needs to sell his house and is wondering why no interest is being shown. Not sure how an emergency fund discussion solves the problem described.


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## MoneyGal (Apr 24, 2009)

Yes, but: http://canadianmoneyforum.com/showt...-s-Money-Diary?p=132610&viewfull=1#post132610


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## Sampson (Apr 3, 2009)

I'm not sure the OP would qualify for much more of a mortgage for the 2nd house. $75k gross, with potentially have of that going away during wife's mat leave and an already high debt-servicing ratio doesn't leave much room to borrow to buy a BIGGER house.

If you really need a bigger place immediately, rent. Even if you carry your mortgage and rent a place for a few months, the amount of $ pales in comparison of making the wrong choice of selling your house for too low, or buying a new one for too much. That mistake would be tens of thousands of dollars.


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## Young&Ambitious (Aug 11, 2010)

I am questioning the $30k car loan... Can't you sell your vehicle and get a gently used one? Buying new is expensive. IMO, new cars and bigger spaces are a luxury not a necessity (generally speaking). Based on wanting everything now, I wonder if you're trying to keep up with Jones' so to speak. You guys need to start thinking about emergency funds, retirement plans and potentially education plans.


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## marina628 (Dec 14, 2010)

Op can forget the 2nd mortgage idea and the rental property idea .I would be doing my homework on what similar homes are being sold for ,are there some improvements that can be done to build up some sweat equity?How much will you be paying for the larger home?The banks may loan you $400,000 with the equity down payment but you really should avoid taking on more debt.


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## The Happy Wanderer (May 7, 2009)

First and foremost, congratulations on your early head start in life, in regards to having a family and buying RE at such a young age. It's never a bad idea being fiscally responsible and the younger you start, the better off you are. Provided you steer clear of some financial traps.

As other posters have suggested, I would separate your wants from your needs. The last thing you want to do is put yourself into financial dire straits with your debt load. You should take many things into consideration before making any moves. What happens to your family income if your wife goes on mat leave? What would happen if one of you were to lose your job? Kids can be expensive. I'm not sure where you live, but if you are from Ontario, you will likely need a 20% down payment for a second residence anyway. Also don't forget what happened in the United States only a few short years ago. We are not immune here in Canada to a housing correction. And if home prices do ease off even 5-15% you will automatically be behind the 8 ball. 

One last thing I'd consider is the $30k dollar vehicle. Have you considered selling it and buying something a little less costly? A car is a car is a car. It gets you from point A to point B. I purchased my car brand new in 2005 for around 24k I took 60month loan fortunately I had 0% financing for 5 years. I still have that same car, but I am at the point where it is needing numerous repairs for worn parts etc. How much do you think I could get for my 7 year old car? A few thousand if I were lucky. An automobile is not an asset.

Other than that, take your time and enjoy the process.


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## michaelman501 (Mar 1, 2012)

Wow i did not think i would get so many responses...i am typing this from my phone so i probably wont get as in depth as i want lol...I guess i did not fully explain my financial situation fully...Me and my wife do not try to keep up with the "jones'" as some would say...We dont buy ourselves new things, we dont buy any of the new gadgets, we by no means are materialistic...I have paid cash for everything in my life including all my vehicles(except the recent truck purchase)..i just got my first cell phone at age 24 because i really didnt want to make payments on a plan...now that i have one i have the most basic package possible...Exactly one year ago my wife and i went out and purchased a lightly used travel trailer which cost $15,000...we paid cash for that purchase...My wife and i and our baby camp every other weekend. It was the best purchase i have ever made..We dont go on big fancy vacations, we go camping and make memories, my trailer is the best purchase my wife and i have made(and they hold there value more so than a vehicle, so i considerate it a asset, which i did not mention in my first post)Now on to the vehicle loan....when you own a trailer, you need a vehicle that will keep your family safe as you are Towing...As well the majority of places we camp at have zero reception which means we need a vehicle that WILL not break down and leave us stranded. Our truck has had to tow us out of two campsites that were hit with unexpected snow storms overnight. I do not regret the purchase at all, i wish i did not have the vehicle loan, however the enjoyment my family gets out of camping is priceless. In my first post i also failed to mention i have $1000 in RRSP's as well as a RESP that we contribute to for our son. In addition my wife and i recently increased our mortgage payments 20 percent(the max we were allowed)in order to pay the principle down. I am sorry if this seems super scrammbled, its difficult to post from a phone lol. I hope i painted a broader picture as to our financial situation. As to all the input i appreciate it(even the stuff that makes me cringe lol) and understandctheir are many smart people on this forum and were all here to help each other.

Ps: TRM i have lurked this site long enough to know all about your rainy day fund/ emergency fund! I totally agree with it.


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## Berubeland (Sep 6, 2009)

If no one is coming to look at the place, it's probably the price. If people are coming and not putting in offers it's the property. 

Having said that, I agree with the other posters. I don't think you need a bigger house. Kids are so expensive anyways. I live in a two bedroom too so I know how crowded it can get sometimes but reorganizing and more efficient use of space goes a long way.


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## michaelman501 (Mar 1, 2012)

Berubeland said:


> If no one is coming to look at the place, it's probably the price. If people are coming and not putting in offers it's the property.
> 
> Having said that, I agree with the other posters. I don't think you need a bigger house. Kids are so expensive anyways. I live in a two bedroom too so I know how crowded it can get sometimes but reorganizing and more efficient use of space goes a long way.


Just figured i would throw out there my place is 1000sqft....i think the issue is definately price and not the property....the place is the nicest most rennovated place in the area...also the most expensive property on the street...i just dont know if i can afford to drop the price much more as i would like to have a decent downpayment on my next place...Berubeland thanks for your input...i am always intrigued by your posts regarding warrants!


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## Spidey (May 11, 2009)

I think getting into a bigger place is a worthwhile goal, especially when you plan on expanding your family. I just don't think that it has to happen immediately, especially considering that you currently only have one 8-month-old child. ISTM that you easily have a year or two to take your time and make sure that the transition is a good one.


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## boba (Feb 3, 2011)

michaelman501 said:


> Just figured i would throw out there my place is 1000sqft....i think the issue is definately price and not the property....the place is the nicest most rennovated place in the area...also the most expensive property on the street...i just dont know if i can afford to drop the price much more as i would like to have a decent downpayment on my next place...Berubeland thanks for your input...i am always intrigued by your posts regarding warrants!


So you have an answer to your question. Somebody already answered, in a post , for a townhouse complex it does not matter to much how many improvements you have done, price is the most important.If your neibour with no improvements done in the last 20 years puts his house to sell on the same price as your of course the buyers will look at yours. But if you price your house tens of thousands more than your neighbour you are out.
Remember one thing, it's a small townhouse, so your buyers will be first time buyers with a limited budget, price come first. If somebody has the money it will most likely look to a bigger place (like you do).
Any potential buyer is not really interested in how much money you paid or how much money you spend in improvements , at the end is purely the price of a comaprable house in your complex with very little extra for the "nice" factor.


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## Four Pillars (Apr 5, 2009)

Camping certainly is fun - we started doing it recently with our kids and it's great.

I'm not going to write much, since I think you are dead set on buying that bigger house (even though you can't afford it) and just want to know how to make it happen.

I would suggest talking to a mortgage broker or your bank about that. They can give you exact info about different scenarios like how to buy a 2nd house and keep the first house as a rental or getting a bridge loan until you sell the first house etc etc. With that proper information, you can make an informed decision about what to do (or even what not to do).


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## Echo (Apr 1, 2011)

We recently went through something similar. We had a two bedroom starter home, and after our daughter was born we started thinking about upgrading. Instead of jumping into something right away, we made a plan to save up enough to put at least 20% down. It took nearly 18 months to do it, but we moved into our new house last summer. We're expecting our second child any day now, so we're happy to have the extra space. But it was worthwhile to wait and make a plan instead of rushing into buying something right away.

Here's more of our story - http://www.moneyville.ca/blog/post/1205922--why-saving-20-down-for-a-house-was-worth-the-wait


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## marina628 (Dec 14, 2010)

I have many friends who have spent $70,000+ on the truck and trailer packages and most of them say same thing that they want to do this when the kids are young as usually when they hit the teen years they wont be interested.Just because you need a certain price does not mean you would get it so if you really want to move ,price your home for what it is worth .If you are short on equity pull the listing and work on getting more paid on the mortgage and consider re-listing next year.If you really want to move now sit down with your bank and see if they will give you a unsecured credit line for the $15,000 or so you will be short on your 20% ,if things go badly you can always convert the trailer to cash .


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## Mall Guy (Sep 14, 2011)

Two properties? its not so much your age, your combined income, two future mortgagees, but think about what financial stress does to a relationship (# 1 cause of divorce ?). You have increased your equity payments, keep that up for another year or two, with kids, 2 or 3 years will fly by . . . I've seen people in the 'didn't sell, two house scenario' never seems to turn out that well . . . enjoy camping and other trip that the current house affords you . . . lots of time for a bigger place . . . lots!


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## jet powder (May 29, 2012)

[
and are wanting a second child and the place just isnt big enough for our needs. 



Michael[/QUOTE]


Hi, Micheal

In the above sentence it makes me wonder if your falling into the trap of buying stuff you do not need by confusing needs with wants ? 

I remember reading that the 2 biggest expenses for the average person over life time was taxes & interest. (united states data)

Confuse needs with wants you could become part of the statistics of paying more interest then money collected from investments. The path many take is to keep buying a bigger house to fit all (that stuff, clutter) which some might call needs in.


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