New government guidelines and how they affect borrowers

Courtesy of Jackie Bowen, Mortgage Broker

Effective March 18, 2011, the following changes will be in effect:

  1. Maximum Amortization on mortgages higher than 80% Loan to Value will be 30 years (currently 35yrs)
  2. Maximum Amount an existing home owner can refinance to will be 85% (currently 90%)
  3. CMHC will no longer insure Secured Lines of Credits (Effective April 18, 2011)

How Does This Impact Home Buyers and Owners Monthly Payments?

Scenario:

Mortgage Amount: $300,000
Interest Rate: 3.79%
Monthly Payment with 35 year: $1285.56
Monthly Payment with 30 year: $1391.12
Difference: $105.56 higher payment with new rules

Examples of what effect the NEW Mortgage Rule Changes will have on borrower qualification

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