IMPORTANT - New Mortgage Rules - How Does This Affect You?

Yesterday the federal government announced new mortgage rules to take effect July 9th. The changes include: 1. Reducing the maximum amortization period to 25 years from 30 years    2. Reducing the maximum amount of equity homeowners can take out of their homes when refinancing to 80% from the current 85% 3. Limiting the availability of government-backed mortgages to homes with a purchase price of less than $1 million 4. Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44% The 1st and 4th change will have a fairly large impact on our purchasing market. Keep in mind that these changes are only for those needing high ratio mortgages, with less than 20% down payment. Purchasers with less than 20% down will find that they will not be able to qualify any longer at the “upper range” from what they were originally preapproved at, and those figures will have to be adjusted. If any of your clients are purchasing and have less than 20% down, now is the time to act and get a purchase secured and applications into the lenders. For any of your clients that I am already actively working with, I will be contacting them individually by email today and tomorrow morning to let them know how these changes. We do not know yet how this is going to affect conventional mortgages, but I will be sure to keep you up to date. More to come. Call me if you have any questions.