MORTGAGE RULES -changes go into effect today! As of October 17, 2016 If you have less than 20% down and have been pre-approved you will need to be pre-approved again under the new guidelines.
Approvals will be “stress tested” to ensure that you can handle higher interest rates.
If you are looking at a High-Ratio mortgage deal and currently shopping for houses you need to set up a time to take care of this right away so you are shopping in the right price point as your maximum purchase power has probably been adjusted. Know your numbers so you don’t lose a property over financing conditions! #realestate
Don’t run for the hills. Don’t listen to the panic-stricken media. There is only one major change to the Mortgage Qualification rules.
We must now qualify high-ratio (insured) mortgages using the Benchmark Rate (Bank rate / Mortgage Qualifying rate) to calculate mortgage payments instead of the actual, contract rate that is found on the commitment.
This means everyone must QUALIFY using 4.64% as a mortgage rate instead of their real rate which is found on their commitment.
Rates are still low. Rates are remaining low for the foreseeable future.
From Andrew Young:
We must qualify people at the Benchmark Rate (Bank rate or Mortgage Qualifying Rate) which is currently 4.64% as opposed to the contract or commitment rate (actual rate on their commitment). We must use a maximum of 25 years as an amortization as well.
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