It's not all about Interest Rate!

We've had a number of inquiries lately from clients that are looking to move into their first home, or are moving into another category.  It has been a very good time to do so, with interest rates at historic lows and property values in Western Canada decreased as much as they have.  What has been very interesting is to see how lenders have changed their parameters and how this has affected a borrower's ability to pay.

CMHC, the country's greatest mortgage insurer, has tightened up their parameters so much it has made the borrowing process much more arduous than before.  A borrower can apply for a loan, be approved--CONDITIONAL to CMHC approval--and then hear that they have been rejected by the insurer.  The borrower has no option but to either come up with more money or allow the purchase to fall apart.

Parameters of lending: the borrower has far fewer options in the marketplace.  Not only have large U.S. players left (GE, CitiFinancial, Wells Fargo...) but the types of loans that each lender does has changed too.  The pendulum has swung way way back--three years ago people were getting approved with all kinds of yucky credit or poor job history.  Now, you can be a self employed dentist making $500,000/year and be declined because of the shirt you're wearing!

Finally, if you are approved, the options that are included on your mortgage may have changed as well.  The mortgage commitment requires careful scrutiny to ensure that it is exactly what you're looking for and that there are no hidden costs in it.

If you have any questions or concerns regarding your financing, please give us a call, we'd be happy to help.