New Mortgage Rules On The Horizon?


There are a few mortgage changes being discussed that will change the mortgage market as we know it today. We are being told that these changes are as good as implemented, we just don't know if it will be next week or a month. The last time they made changes like this we had no idea and only a two week period before the changes were implemented.

The first and biggest change will be with the mortgage qualifying. All mortgages will be required to qualify at a rate 200 points above the contract rate. So if you are getting a 3.09% mortgage rate, you will have to qualify as if your rate is 5.09%. This will lower your purchasing power by approximately 20%. That $400,000 mortgage you qualify for today becomes $320,000. It is important to stress that this will be for people that put 5% down and people that put 95% down. A pre-approval will not save you. Your rate will be held but you will have to qualify at the new rates. 

Another potential change is called risk sharing. The government will be requiring the lenders to take part financially in the mortgages that default. Right now they do not have to do this and it will be a large added expense for the lenders. This will cause an overnight increase of rates by approximately .20%. It's important to get in a rate hold before this happens.

If you think you will be buying any time in the next 3-6 months, it is time to move now. Rates have already increase over .50% since the spring and things are looking like they are going to get harder in the near future.

Contact us if you have any questions.


This article is in the category: General.


Related Articles

Self-Employment and Mortgages

Self employment and getting a mortgage

Mortgage Penalties - What They Are And Why They Are Important

Mortgage penalties are one of the most important terms of your mortgage. The conversation about penalties should happen when you are choosing a lender not when the penalty is having to be paid. Not knowing could cost you thousands of dollars.

What every first-time home buyer should know

First time home buyer advice

Blog Categories