New Mortgage rules

I realize that I am a little slow with my post, but I thought I would help some first time home buyers understand what had happened last week with some changes to the mortgage rules.

In reality, there hasn't been a lot that had changed. The changes were made only to the riskiest of borrowers. The loan amortization had been reduced to 30 from 35. Home lines of credit were no longer being insured by the CMHC. The maximum borrowing amount is now 85% of the home's value, down from 90%.

What does this mean? It really does not affect first time home buyers. First time home buyers should be qualified based on a 25 year mortgage. The fact that it is reduced from 35 to 30 has little impact. First time buyers also do not need home lines of credit as they have not built any equity.

My personal theory (and please seek your own professional advice) is that this is just a signal of some of the measures that are going to come into place in the near future. My prediction is that home buyer's are soon going to need a larger down payment to purchase their homes. This will affect first time home owners. It's not easy to save for such a large lump sum.

There are factors that you should consider before jumping the gun on purchasing a home. You need to understand how the CMHC insurance premium works on homes with less than 20% down. I would suggest that you consult a mortgage professional to truly understand the implications.

My job as a real estate agent is to educate you on all facets on purchasing a home, so that you can find the information you need to make the right decision for you or your family. After all, the home is likely going to be the largest investment in your life.