| By :
Molly Wider
In an attempt to prevent potential home buyers from purchasing homes they cannot afford, home buyers will now be facing tighter rules. These new rules are an attempt to discourage people from taking out mortgages they may not be able to pay for in the event of higher interest rates or larger issues such as job loss or another recession. This decision comes after the past few years have seen people taking out large mortgages as housing prices soared across the country, combined with the announcement of interest rate increases. However, many real estate agents feel that this move will only cause potential homeowners to become creative in their financing to ensure they qualify for a mortgage. Under the new rules, the government will require that all potential homeowners applying for a mortgage meet the borrowing standards for a five-year, fixed-rate loan, even if they chose variable or shorter-term loans. The maximum that Canadians can withdraw when refinancing their mortgages will change to a maximum of 90 percent, down from 95 percent of the value of their home. Also, a minimum of 20 percent down payment is necessary to qualify for CHHC insurance for non-owner occupied properties acquired as an investment. It is estimated that between 90 per cent and 95 per cent of qualifying homeowners have been putting the minimum five per cent down payment, which they obtain from either family help or their own line of credit. It is difficult enough for people to come up with the five per cent, so a minimum 20 per cent will definitely cause people to come up with creative financing. In the meantime, many people have jumped on board now, buying their homes before the new rules take effect, inevitable making it much more difficult to qualify for a home mortgage. The Canadian Real Estate Association shows there were almost 100,000 homes listed for sale in March, an increase of 20 per cent increase, with an average home price of $340,920. However, Ontario and British Columbia residents will be facing harmonized sales taxes in their provinces as of July, which will raise the costs of buying a house by thousands of dollars. The Canadian Real Estate Association foresees the housing resale to be slower in the second half of 2010, noting that resale listings have increased and should help balance out the housing market. For people who are thinking of getting into the housing market, it is never too late for creative financing. If personal debt is weighing you down, you may want to consider a consolidation loan or a car title loan. Getting a bad credit loan from a private lender will definitely help you get back on the right financial track.
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