Posted Rates are the New Qualifying Rate!

This is some new information that came in over the weekend on the changes to qualifying that they are implementing on April 19th.

 Starting on April 19th, to qualify for a Variable rate or a term LESS than 5 years you must qualify using the greater of the 5 year posted rate or the contract rate. Because most lenders  offer rates lower than posted, posted should be the higher of the two rates.

 If you are currently looking at a term of less than 5 years or a variable rate, that would mean that they would have to qualify using the 5 year posted rate (5.39%) vs. the 3 year discounted rate (3.29%) that some banks will currently use. That could make for a BIG difference in the amount you qualify for.

If you are looking at a mortgage amount of $300,000 over a 35 year term and wanted a variable rate or a 1-4 year term that would mean you would have to qualify on a payment amount of $1589.49. If you are looking at a 5 year fixed rate, you can qualify using a payment of $1290.80. Thats a $300 per month difference.

If you are looking to qualify for a 5 year rate, there is no change to that, you will still be able to qualify for the 5 year discounted rate (3.79%).

It is pretty easy to see which term is going to be the popular term going forward.

Remember, last time there was a change to the mortgage rules, lenders started changing the rules prior to the change date.

These rules are only for Insured deals. If you have a client with 20% down, the rules will vary from bank to bank.

 If you  have any questions please email me anytime

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