19 January 2011
How do the amortization changes affect monthly mortgage payments?
According to new rules, the maximum amortization limit is reduced from 35 years to 30 years. It means mortgage payments become about $35 higher for every $100,000 of mortgage (as compared to a 35-year amortization).
How many people will be influenced by the reduction to 85% LTV on refinances?
According to TD Bank, about a tenth of all refinances will be affected.
Will a 40-year amortization be still available?
Actually, yes. We still have some lenders offering 40 years amortization with the downpayment of more than 20%
What are the variants for those who want to refinance up to 90% after March 18?
A few lenders offer uninsured refinances to 90% LTV. It’s possible that in time there will be more of them. But of course, the rates are much higher than on insured mortgages – often even by 3-6% or more.
How will HELOC be affected by the new rules?
If you get HELOC before April 18, you won’t be affected by these changes.
Will 100% financing be still available?
Yes. In case of cash-back mortgages people can borrow 5% of down payment. It’s a surprise that the government considered HELOCs to be more dangerous for the consumer debt growth (with its strict qualifications and 20%+ equity requirements) than the cash-back down payment products.
It’s obvious that before making any serious mortgage decisions you should always consult your mortgage broker in order to see how these changes can affect personally you and what will be better in your case.