Toronto Real Estate and Morningside Heights, Markham Boxgrove Housing Updates Jas Jagpal: How Mortgage Qualifications Really Work

Saturday, February 4, 2012

How Will CMHC Announcement Affect Buyers & Sellers?

Toronto Real Estate CMHC NEWS

You should be concerned or not? Most Buyers have no reason to be after CMHC announcement.

CMHC will begin (if they already haven't) to tighten it's loan insurance approvals for perspective home buyers.

They are already nearing $550 Billion dollars of loans insured and who knows how fast they will reach their $600 Billion limit set by the Government and insured by Tax payers.

How will it affect you? Well, first time buyers, self-employed and those with less than 20% should be especially concerned if they were thinking of buying a home in the near future.

Banks should be taking some of the blame for even insuring loans where Buyers put down more than 20%. This is an "accounting move" and banks "positioning" themselves to save their ass if anything happens in the market because the "tax payers" are liable to pay for it.

So if you were thinking of buying... you might have to come up with more soon 10% instead of 5% or be able to pay higher monthly premiums if amortization rules change to 25 years.

So make sure you pull your "credit scores", talk to your lender to see what you are approved for, have reasonable savings and you might want to consider buying now at these record low- interest rates.

These rules will impact SELLERS too and will tend to cool the market down and put downward pressure on pricing. So Sell Today with my 30-60 Day Sold Guarantee!

Jas Jagpal, Broker
RE/MAX Dynasty Realty Inc

To Buy, Sell, Assign, Invest give Team Jagpal a call.

Posted via email from Markham Homes for Sale : Markham Condos Real Estate : Investment Pre-Construction Condos

Sunday, October 10, 2010

What YOU should not do after BUYING a House or Condo!

I was talking to a fellow Realtor in my mastermind group and once again a Buyer almost jeopardized their deal from closing.

What happened?

Here goes. A Buyer was pre-approved for a Mortgage with a bank and was CMHC insured. Everything is good and dandy! The Realtor advised the Buyer "Not" to purchase anything significant and take on more debt. The Buyer understood this.

This is where we as Realtors have to be EXPLICIT in our instructions to our Buyers.

What happened next is that the Buyer went to a department store and bought furniture. The furniture purchased was one of those "Don't pay a dime until..." deals.

Anyways, the department store also offered the Buyer a credit card. The Buyer accepted and got a credit card with a 10K limit. The Buyer correctly thought they were not taking on any debt as they didn't have to pay for a long time and thought having another credit card wouldn't hurt.

But a week or so later the Buyer is informed that his home purchase will no longer be insured and the bank refuses to offer the loan.

Why did this happen?

By accepting a credit card (even if you don't use it), you have in effect taken out a "line of credit" - or debt. In addition, this automatically lowers your FICO credit score.

Why is this a PROBLEM?

You see... when you qualify for a Mortgage... the amount you qualify for depends on 1. Credit Score 2. Your Income 3. Your Debt

So if you qualified originally for $200,000. By accepting another credit card which effectively reduced your credit score you no longer qualify for $200,000 but maybe it is now $190,000. In order for the deal to close you now have to make up the difference in cash! Most people can't!

So you see one lapse of judgement, or simply not knowing how mortgage qualification works; is the difference between you happily moving into your dream home or losing thousands you gave as a deposit.

Fortunately in this situation the Buyer found out more than a month in advance. The Buyer cancelled the order. Cancelled the Credit Card. It takes a month for it to show up on the bureau and affect the credit score and hopefully the Buyer will be able to rectify the problem and get the funds they need to close on the deal.

So folks... what should you not do until you have literally CLOSED on your deal.

1. NEVER BUY ANYTHING unless you use CASH.
2. Don't accept ANY CREDIT... credit card, line of credit, etc. that can affect your credit score and what you are qualified to borrow.

Have a question? E-mail jas and he'll blog it if its a good one.

Jas Jagpal,BSc. York University Sales Representative
E: jasjagpal@rogers.com Cell: 647-272-6629 W: www.JasJagpal.com

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