As per recent reports from real estate markets, newbie house hunters will be subject to new rules which would demand bigger down payments on those homes which are listed above $500,000. Such changes are said to have a close impact on some of the prominent real estate markets but the question lies in what extent will the impact be. This increase in the requirement for down payment will increase the bar to homeownership quite seriously in Toronto and Vancouver. This is specifically true for the first-time homebuyers.
Finance Minister Bill Morneau announced in the month of December the minimum that is required to pay down while taking out a home mortgage loan will increase thereafter. The new rule says that the amount to be paid down will be 5% on the first $500,000 and 10% down on any amount of dollar which is above the said amount. For instance, if you wish to buy a home worth $700,000, as per the previous 5% rule, a buyer would require paying down at least $35,000 to qualify for a home loan. However, since February, 2015, this new minimum amount on that home would rise up to $45,000 or an extra of $10,000.
This specific change is perhaps the first move of the federal government to cool down the housing market since 2012 and this rule has been especially introduced with an aim of levelling the steep jumps in price in Toronto and Vancouver. As the new rules have especially targeted the high-priced homes, the major portion of the real estate markets of the country won’t come across any huge impact. This new rule is more of a targeted measure which is tailored to discourage that segment of buyers who go into the market with very little savings. With the new requirement of bigger down payment, they will now know the importance saving before buying a home.
The introduction of TILA-RESPA Integrated Disclosure rule
Since it was first introduced in 2011, the CFPB has since then been working in order to make the process of loan making more and more transparent. The TILA-RESPA Integrated Disclosure rule changes the rules of disclosure for mortgages. It will also change the way in which they have been doing business since the last few decades. The rule comprises of 2 new “Know before you Owe” forms which has replaced 4 present forms. The goal behind introducing these 2 new forms is to ensure consumers have a clear understanding of every step regarding the fees that they’re about to pay or the terms of the loans. Such forms will be used in each mortgage transaction.
The Closing Disclosure and the Loan Estimate has replaced 4 previous forms, the Good Faith Estimate & the Truth-in-Lending disclosure offered when you apply the loan and the HUD1 settlement statement and the Truth in Lending form which was issued during closing.
Experts are of the opinion that the forms are standard and really good. They make it simpler to compare fees and rates while shopping and comparing rates on a mortgage loan. So, if you’re a first time homebuyer, you need to remain aware of the new rules that dominate the mortgage market.