Among other recent changes to insured mortgage lending guidelines, the Dep't of Finance has announced a change starting April 9, 2010 that will make it tougher for self-employed people to qualify for a mortgage.
In the past it was understood that some self-employed people, while they weren't necessarily reporting significant income, might still be operating profitable businesses. Starting April 9, 2010, if you've been in business at least 3-years, your "net income" will become a key factor in qualifying for a mortgage.
What this means is that a significant number of self-employed borrowers will have trouble qualifying for a mortgage through traditional lending channels. Fortunately, there are mortgage lenders in Canada who do not use the conventional insurers, and who will still be able to qualify your buyer without proof of income, with as little as 10% down payment.
It will be more important than ever to have a good mortgage broker who can save you time - and possibly your deal too - by quickly determining the best place to get your buyer a mortgage.
If you need my help placing a mortgage, give me a call. I promise to respond promptly and professionally. I look forward to hearing from you!
Sincerely!
David Grossman
The Mortgage Mensch
Tel: 416 876 2031
Website: www.mortgagemensch.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.
Tuesday, March 16, 2010
Tuesday, March 2, 2010
Recent Dep't of Finance Changes: Much ado about nothing
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.
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.
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