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NEW MORTGAGE INSURANCE RULES ANNOUNCED
Federal Finance Minister Jim Flaherty announced changes to mortgage insurance rules effective April 19, 2010. Although there was a lot of press on this topic, it is important to know that there were no changes to most down payment requirements, or length of amortizations.
The key issues are as follows:
1. All borrowers must meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term;
2. The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one's home;
3. Non-owner occupied properties will require a minimum down payment of 20%.
The Government is concerned that some borrowers who are taking out variable-rate mortgages will struggle with their monthly interest rates should interest rates rise. This concern is judicious and the government is taking prudent measures.
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