If you’re considering buying a new home or refinancing your current mortgage, it may be a wise move to act before July 9th!
The Federal Government announced this morning four new clampdowns on insured mortgages that will quickly come into effect on Monday, July 9th, 2012. These changes will affect all new borrowers or refinancers who will require mortgage insurance on their next mortgage. Mortgage insurance is required on all mortgages where buyers or refinaciers have less than 20% down or are greater than 80% loan-to-value.
These changes include:
- Reducing the maximum amortization period to 25 years from 30 years
- Reducing the maximum amount of equity homeowners can take out of their homes when refinancing to 80% from the current 85%
- Limiting the availability of government-backed mortgages to homes with a purchase price of less than $1 million
- Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%
These changes will affect all new mortgage borrowers applying for mortgage insurance on or after July 9th, 2012. They will not affect new borrowers who have or will have their mortgage insurance approved and in place prior to the date. Any new purchasers that are currently preapproved need to ensure that they have a signed purchase agreement dated prior to July 9th to be exempt from the new rules or they may find themselves no longer qualifying for their pre-approval. The changes to amortization periods will not affect current mortgages that are just being renewed or transfered after July 9th. No changes to conventional mortgage rules (less than 80% loan-to-value / down payments larger than 20%) have been announced at this time.
If you’d like to review your options or if you have any questions, please give me a call or send me an email, and I’ll be happy to discuss how these changes may affect your mortgage situation. If you currently have a mortgage preapproval with us, you can expect to be contacted shortly to review how and if these changes may affect you. It’s my job to ensure you have the best options and strategies available at all times!