By now you have seen many reports - I am sure - about the Dep't of Finance's recent changes to insured mortgage lending guidelines set to take affect April 19, 2010. However since I'm still receiving questions on the topic, I thought I'd share my views on the subject.
In a nutshell, as far as I'm concerned, it's business as usual. Breaking it down in order of impact:
1) Qualifying for a mortgage on the 5 yr vs 3 yr rate. Though I am hearing from one of the banks that they are confused about whether they need to use their posted or discounted rate in qualifying borrowers, I think this is a non-issue. If they wouldn't have these silly 'posted rates' (which nobody ever pays anyway) they would probably be a lot less confused. We, as brokers, have many lenders available to us that only offer discounted rates to prime customers so I don't see a lot of reason to be confused. The current discounted 3 year rate with most of our lenders is around 3.5% and the 5 yr rate is around 3.79%. A .29% rate difference won't have a significant impact on your maximum mortgage. While a few buyers who planned to go in at the MAX may find they now need to buy something a bit smaller, these buyers are the exception rather than the rule. If you happen to be working with a buyer who falls into this category, find a good mortgage broker who can work with your buyer to try and make the deal work. Sometimes even just paying off a credit card with a small balance can do the trick.
2) Insured investment properties requiring a minimum of 20% down. Call me a small time broker, but in my 6-yrs of brokering, I have only used this product once. People are still allowed to get an insured mortgage on a "second home" with as little as 5% down, and if they're in such a strong position that they can afford to purchase yet a 3rd home, I think they should be able to come up with at least 20% down. They'll benefit by avoiding costly insurance premiums (the insurance premium for investment properties are currently more than double what they are for an owner occupied property!!!).
3) Refinances to 90% instead of 95%. In the hundreds of mortgages I have placed in the last 6 years, only once have I refinanced someone's property to 95%. I hope you don't ever have to do this. The insurance premiums are very high!
So, that's all there is to it. If you need my help with a deal, whatever the story, give me a call. I specialize in bank declines and I'm ready to listen to your story.
We place 1st, 2nd and 3rd mortgages on residential, commercial, industrial and investment properties.
I look forward to hearing from you!!!
Sincerely!
David Grossman
The Mortgage Mensch
Tel: 416 876 2031
Website: www.mortgagemensch.ca
Click here to check out some of my latest Youtube videos at www.mortgagetube.ca
If you are receiving this feed as an e-mail and don't see the post, please click back to the blog page http://mortgagemensch.blogspot.com/ as it is probably a video that has been posted. Thank you for subscribing to this blog! For more information call David Grossman at 416 876 2031 or go to http://www.mortgagemensch.ca to visit website.
