Today is day one of the government’s new mortgage rules.

Here’s a quick video rundown on qualifying rate….

QUALIFICATION RATE

The biggest rule change affects borrowers who put down less than 20% and want a variable or 1- to 4-year fixed term.

Yesterday, you might have qualified for a high-ratio $250,000 variable-rate mortgage with a 3.8% qualifying rate.

Today, lenders will demand you qualify with a 6.10% rate.

That means your income needs to be around 25% higher today than it did yesterday to be approved for the same variable or 1- to 4-year fixed rate mortgage!

Nothing changes with 5- to 10-year mortgage terms.

The qualification rate will still be based on the rate you’re quoted.

REFINANCES

Starting today, insured refinances will be limited to 90% loan-to-value.

2ND HOMES

Second homes now qualify for high-ratio insured financing if, and only if, they have no more than one unit.

RENTAL FINANCING

People buying rental properties now have to put down 20% (instead of 5% last week) to get insured financing.

You can put down less than 20%, but you’ll generally need to use an uninsured lender, which means higher interest rates.

In short:

When a subject property or owner-occupied property generates rent:
50% of gross rent is added to the borrower’s income
Property taxes and heat are excluded from Total Debt Service (TDS) calculations.
For non-owner occupied rental properties:
100% of net rental income is added to the borrower’s gross income
The mortgage payment, property taxes, and heat are excluded from TDS calculations.

Net rental income:

A 2-year average of rents is required to establish net rental income (we’re checking on what exceptions may be permitted)
Net rental income is proven via the borrower’s T776 Statement of Real Estate Rentals OR lenders can use their own guidelines to validate rental income. Net rental income can be grossed up 15% if the borrower takes deductions for depreciation or amortization, or rental-related self-employed income.

PS  on Investment property

However, the 20-per-cent minimum down payment rule is less likely to make a significant dent in real estate activity as there are no rules as to where those funds can come from. There is nothing in the rules that would prevent homeowners from withdrawing equity from their primary residences to meet the 20 per cent threshold on a second investment property, for example.

Creative financing will become increasingly popular.

Here again, I can’t stress how important it is to get the

RIGHT ADVICE – AT THE RIGHT TIME…

Ultimately, I think home buyers will continue to tap their personal credit lines and family connections to get the money they need to enter the housing market.

Bottom line – If you’re going to invest in real estate, you’ll have to put down a minimum of 20 per cent.

You may want to contact me to discuss Email me

Mark Fidgett | 604-273-2002

“Your Personal Mortgage Consultant….For Life!”

PS – Please Don’t Keep Me a Secret
A REFERRAL is when you INTRODUCE someone you care about to someone you TRUST!

T 604.273.2002 | F 604.522.2072
W http://www.notapennydown.com

An independent Mortgage Specialist associated with the Verico Mortgage Network.

Borrowing Guidelines for Insured Stated Income Programs in Canada are about to change

The borrowing guidelines for insured Stated Income Programs are about to undergo some major changes and these changes will be implemented effective April 9, 2010.

The changes are being announced by CMHC (also known as Canada Mortgage and Housing Corporation). CMHC’s changes, as well as those announced by Finance Minister Jim Flaherty effective on April 19, 2010 are all attempts to help cool off the heated housing market which is now being driven by record-low interest rates. More importantly, these new measures are required to protect borrowers from taking on more debt than they can afford especially as interest rate hikes are imminent. While Canada still allows Stated Income programs here, they are becoming very rare in the U.S. The massive number of defaults and foreclosures reported by the U.S. after the 2008 credit crisis were attributed mostly to Stated Income programs that were used to place under-qualified borrowers into mortgage loans that they could not afford.

While Canadian lenders continue to use the Stated Income programs here, customized for commissioned and self-employed borrowers, CMHC will now be scrutinizing those same applications using tighter underwriting criteria making the CMHC Self-Employed mortgage insurance program a little harder to access.

What exactly does Stated Income mean?

Stated Income means exactly that. When a mortgage application is created, for a self-employed or commissioned applicant, and the entire income amount is not verifiable in traditional documents, for example a Notice of Assessment, the applicant may apply under the Stated Income program to allow an income adjustment to help qualify them for a home purchase or re-finance.

Most important change is Tenure: those who have been working in the same business for greater than three years, would not be eligible for the Stated Income program and therefore those in this category would have to provide proof of their income, for example, a Notice of Assessment.

I welcome your comments below : )

Mark Fidgett | 604-273-2002

“Your Personal Mortgage Consultant….For Life!”

PS – Please Don’t Keep Me a Secret
A REFERRAL is when you INTRODUCE someone you care about to someone you TRUST!

T 604.273.2002 | F 604.522.2072
W http://www.notapennydown.com

An independent Mortgage Specialist associated with the Verico Mortgage Network.

Imagine if this was you?

Don’t wait, call today and allow me to enhance your net worth “For Free”

Why wouldn’t you?

I welcome your comments below : )

Mark Fidgett | 604-273-2002

“Your Personal Mortgage Consultant….For Life!”

PS – Please Don’t Keep Me a Secret
A REFERRAL is when you INTRODUCE someone you care about to someone you TRUST!

T 604.273.2002 | F 604.522.2072
W http://www.notapennydown.com

An independent Mortgage Specialist associated with the Verico Mortgage Network.