Very confused about what exactly is happening in Real estate as well as Mortgage Market after April 19, 2010
Some confusing information is coming from different sources
Here is my situation -
Bought a house in 2008 with Mortgage
Planning to buy new ( somewhat bigger ) house directly from builder
This house will be ready for possesion after 8-10 months
While going for Pre-approval for 2nd Morgage, I was told about putting existing house on Rental. Rental income that will count for Pre-approval will be 80 % of total Rental income
Also I was told that 10 % downpayment is enough to get pre-approval for 2nd Mortgage
Eventually at the time of new house possesion, I will be selling my existing house & will be paying 20 % as downpayment
( No intention of keeping two houses & Mortgages at same time )
Now when I am discussing with different Mortgage Brokers for Pre-approval of 2nd Mortgage, some are saying -
Minimum 20 % downpayment required as existing house is going on Rental
Also Rental income that will count for pre-approval will be only 50% of Total rental income
While some brokers are saying, this is not true
Those changes will happen only after April 19, 2010
What is TRUE, I don't know ?
Can some one please write what's the status as of today & what changes are happening after April 19, 2010 ?
It is from April 19. See
http://www.google.com/hostednews/canadianpress/article/ALeqM5jp5t6CCVLGCGQoq-QbdKCt-AgBBA
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Location: Brampton, Ont, Canada
Posted on: 08-04-10 20:42:13
Rate Hold Policy:
To qualify under the old rules, the pre-approval must be submitted as a live deal before April 19th. Certain lenders are already adapting their systems to the new rules so not all lenders are lending current guidelines.
If a live deal is submitted under the old rules on April 18th, it can fund 90 or 120 days later in keeping with the lenders rate hold policy.
Rental income calculation:
As new rules CMHC will allow a maximum of 35% of your gross monthly income to be allocated towards your housing cost, and up to a maximum of 44% of your gross monthly income towards all your credit obligations.
Under the proposed new rule, a house with a $1000/mo basement will be treated as follows:
1. 50% of the $1,000 of rental income is $500/mo.
2. $500 dollars per month will be added to your monthly qualifying income.
3. CMHC will allow a maximum of 35% of your gross monthly income for housing.
4. 35% of $500 per month is what the actual buying power of this rent becomes.
5. 35% * $500/month = $175/mo.
While with the current rules: it was 80% offset for rental, $1000/month rent will yield 80% or $800/month of extra buying power
If you have decided to sale your first house then Just sell it and put the cash towards the new place and get the best rate at that time. No need to panic.
You should be only worry if you want to keep this home and buy new one.
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
There are few agents who started working as just listing agent or with limited services. Just wondering how it's going work with Buyer's agent.
A buyer will have to pay some kind of fee to the RE agent he hires, since there's no commission to be split?
OR buyer's agent is not going to show that kind of house which does not fully represent by agent to split commission?
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Housing market overheating: Royal LePage
http://www.theglobeandmail.com/report-on-business/housing-market-overheating-royal-lepage/article1527304/
Location: Brampton, Ont, Canada
Posted on: 09-04-10 14:29:37
Quote:
Originally posted by rahul_singh23
There are few agents who started working as just listing agent or with limited services. Just wondering how it's going work with Buyer's agent.
A buyer will have to pay some kind of fee to the RE agent he hires, since there's no commission to be split?
OR buyer's agent is not going to show that kind of house which does not fully represent by agent to split commission?
------------------------------------------------------
Housing market overheating: Royal LePage
http://www.theglobeandmail.com/report-on-business/housing-market-overheating-royal-lepage/article1527304/</font>
Hi Rahul
I guess this time you are putting your view on different topic. - here we are disscussing about how new rules will apply to get funded for the property.
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
Quote:
Originally posted by Blue_Peafowl
Rate Hold Policy:
To qualify under the old rules, the pre-approval must be submitted as a live deal before April 19th. Certain lenders are already adapting their systems to the new rules so not all lenders are lending current guidelines.
If a live deal is submitted under the old rules on April 18th, it can fund 90 or 120 days later in keeping with the lenders rate hold policy.
Rental income calculation:
As new rules CMHC will allow a maximum of 35% of your gross monthly income to be allocated towards your housing cost, and up to a maximum of 44% of your gross monthly income towards all your credit obligations.
Under the proposed new rule, a house with a $1000/mo basement will be treated as follows:
1. 50% of the $1,000 of rental income is $500/mo.
2. $500 dollars per month will be added to your monthly qualifying income.
3. CMHC will allow a maximum of 35% of your gross monthly income for housing.
4. 35% of $500 per month is what the actual buying power of this rent becomes.
5. 35% * $500/month = $175/mo.
While with the current rules: it was 80% offset for rental, $1000/month rent will yield 80% or $800/month of extra buying power
If you have decided to sale your first house then Just sell it and put the cash towards the new place and get the best rate at that time. No need to panic.
You should be only worry if you want to keep this home and buy new one.
Thanks
There are few reasons for not selling my existing home at present
1. I may have to move twice if I sell house now
2. Real estate market will be better after 6-8 months ( hoping ). So selling point of view this looks better
Location: Brampton, Ont, Canada
Posted on: 09-04-10 15:51:28
You don’t need to sale your house right now.
Go ahead and book for second house,
Just get condition wave by getting pre-approval, any bank will do it for you. Then later on when your house is about to ready , sale your existing house ( Make sure to ask to stay 2-3 month in it or extend your closing date for 2-3 months)- and then move to new house.
NOTE: get pre-approval from bank ASAP (before 18 April) so u can get pre-approval easily with old rules ( just to wave condition) -
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
