A week ago, my wife's cousin called me asking me questions on the new mortgage rules that will come in affect in April. I told him about the new rules and was surprised when I heard from him yesterday that a Realtor was telling them starting "April 17th, you had to put a 15% down-payment to buy a house." What crap! His wife called the lady from an Ad and she blatantly looked them in the eye and lied! Call me naive, but in this day of the internet, where a simple search can get you most of your answers, is it wise to lie and try to influence someone to buy by creating fear and panic! I think not! I wrote about the new mortgage rules in my past blog but here it is again. Do your due diligence before accepting facts from Salespeople... except me of course. :)
1. At this time you can still purchase with 5% down. (I know you can get a 5% cash back and in affect buy with 0% down ( but obviously you pay with a higher interest rate and must have good credit to qualify))
2. Mortgages will be qualified on the 5 year, fixed, posted rate... not discounted rate. This ensures you can cover monthly payments when interest rates do go up as is forecasted to happen by 2-4% in the next 2 years.
3. Investors will have to put down 20% from the current 5%.
4. You can only refinance 90% of the house value from the 95% it used to be.
In fact these changes are GOOD for the economy. It will reduce buyers purchasing homes who shouldn't in the first place. It will ensure investors have a significant stake in their investments and do not artificially inflate costs to legitimate buyers with their speculative buying.
So you will still be able to buy with 5% down, providing you have good credit and a decent salary. I've been told, some people borrow the 5% from family and in 6 to 12 months get a line of credit on their house and pay the loan back, to bypass the 5% down. As always where there is a will there will be creative ways to finance... but I highly recommend having a stake in your purchase. Call me old school, but there is great sense of pride when you actually buy a home and do it with your own savings!
Have any questions.. call or email me. If you're selling soon in the GTA, find out how you can save money with my commission packages.
