Your payments are based on your contracted rate, therefore, this new rule will not cost you more, however it may change the size of the loan you qualify for. This may result in having to save a larger down payment, seeking a property of lesser value and definitely reducing any outstanding debt.
Looking at a variable rate mortgage with an option to convert to a fixed rate is another alternative, as it could mean qualifying at a lower rate (if the rate plus 2% is less than the benchmark of 4.89%).
Refinancing can be a positive financial move only if it means reducing your mortgage payment, shortening the term of your loan or increasing your equity at a faster pace. If a refinance is something you have been strongly considering to secure your financial wealth, reviewing your options in the balance of 2017 could help avoid having to accumulate more equity. Keep in mind once the new regulations are in place, it may slow this process by making it difficult to qualify for your refinance.
It seems entirely unfair that after ‘x’ amount of years making every monthly payment in full and on time, that you should now have to re-qualify. Well, here is some good news; this rigorous qualifying requirement will not apply to mortgage renewals if you remain with the same lending institution. Our advice: stay put.
Keep saving, and then save some more. The higher your down payment, the less loan you require and the more house you can afford. Whatever you do, ensure your clear understanding of what amount you qualify for under the new regulation. Get pre-approved before you start house-hunting to avoid any surprises or disappointment that shocks you halfway through the buying process. Obtaining a co-signer is still an option for you as additional income will aid the qualification process.
While TFN Realty is certainly well informed with all of these scenarios, we are also stocked with a vast network of connections and industry professionals who can further assist you, address your concerns, and refer you to some of the best Mortgage Specialists around. The Stress Test does not necessarily mean you will no longer be able to afford a home, however, when changes do occur we are here to help find a solution with you. We encourage you to reach out before these changes take place.