New Qualification Rules for Mortgages

We met with mobile mortgage specialists from RBC this week to discuss how the recentconventional-versus-high-ratio-mortgage rule changes are affecting home buyers. Its not overly complex but the changes do have a significant impact on both buyers and the potentially the real estate market.

Lets run through a possible purchase scenario 

  • Buyer Client is a first time home buyer
  • They saved 5% for the down payment
  • $100,000 combined income
  • $800 a month for Loans, Car Payment, VISA Balance etc.

Subject Property they would like to purchase

  • Purchase Price $475,000
  • Property Taxes $5,000 / year
  • Heating and or other Expenses $1,200

 

2017 Qualification Rates for a 5 year fixed term – 3.19% 

  • Purchase Price $475,000
  • Purchase 5% Down Payment
  • 25 Year Amortization
  • Estimated Monthly Payment $2,221

** Total Debt Service Ratio =42%  equals mortgage APPROVAL  ** 

2018 Qualification Rates for a 5 year fixed term – 5.14% 

  • Purchase Price $475,000
  • Purchase 5% Down Payment
  • 25 Year Amortization
  • Estimated Monthly Payment $2,712

** Total Debt Service Ratio =48%  equals mortgage DECLINED  ** 

ADJUSTED QUALIFICATION *** 2018 Qualification Rates for a 5 year fixed term – 5.14% 

  • Purchase Price $400,000
  • Purchase 5% Down Payment
  • 25 Year Amortization
  • Estimated Monthly Payment $2,299

** Total Debt Service Ratio =43%  equals mortgage APPROVAL  **

Now more than ever it is so important to align yourself with and partner with industry professionals to help navigate you through all of your real estate options and the process of searching for and purchasing your new home. You may qualify for more than you think., You may have to adjust your search criteria, either way knowledge is truly a power full tool and a tremendous advantage in this current market place

Would like to thank Marlene Jobb, Ethan Jobb & Alexandra Jobb for presenting and  assembling the above numbers and scenarios. 

  • Marlene Jobb @ (905) 432-4310 marlene.jobb@RBC.com
  • Ethan Jobb @ (289) 927-3720 ethan.jobb@RBC.com
  • Alexandra Jobb @ (905) 995-2126 alexandra.jobb@RBC.com

Thank you

 

SCOTT ROY, Sales Representative

RE/MAX JAZZ Inc. Brokerage, 21 Drew Street, Oshawa ON

(905) 728-1600 Office or (905) 435-7355 Direct – scott@lifeindurham.com

 

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