As you may already now the new Government regulations on mortgages will come into effect March 18, 2011.
Here are the changes outlined below:
Effective March 18, 2011:
- The mortgage amortization period is being reduced from 35 to 30 years
- The maximum loan to value ratio for refinancing is being lowered from 90% to 85%
- Government insurance backing on home equity lines of credit, or HELOCs, has been removed
Exceptions may be allowed after the new measures come into force where they are needed to satisfy a binding purchase and sale, refinance or financing agreement entered before the March 18, 2011 change in the rules.
The main change that will affect homebuyers is the 1st rule as it will reduce a homebuyer’s purchasing power by approximately $25,000 or more plus a reduction to a 30 year amortization increases a monthly payment approximately by $160 to $180 per month in which both is dependant on the purchase price.
The reduction in a homebuyer’s purchasing power can significantly affect the quality of potential properties a person can choose from.
Hope that helps and if you have any further questions please feel free to contact me.