CMHC Implements Its Changes
CMHC implemented its changes yesterday, May 30th, 2014. CMHC is now discontinuing self-employed insurance applications without 3rd party income verification and second home insurance. However, it appears that the two private insurers, Canada Guaranty and Genworth Financial, have not implicated any major changes. The only change observed with Genworth was that they will only be insuring secondary homes with one unit, rather than two or more.
Often lenders will restrict with whom you can apply for mortgage default insurance, thus it is important to inquire before applying if you feel you might not meet requirements.
What does this mean for self-employed applicants? If you are purchasing a home with less than 20% down, you must have valid income verification, not just a self-stated signed document if your lender requires insurance from CMHC. If you do not have valid income verification, we still have a limited amount of lenders that will take your application.
What does this mean for homeowners? If you are looking to purchase a second owner-occupied home with less than 20% down you cannot use CMHC as your insurer. However, one of the two private insurers will still accept your application (lender limiting).
There is no guarantee that the Government will not intervene with the private insurers to implement more changes, but for now it appears that they have settled. If you feel that these new changes might impact your decision to buy in the future, now would be a great time to take advantage as rules remain unchanged in the private sector.
For a more in-depth and professional review of your individual and personalized situation please give Harpreet Singh The Mortgage King a call at (416) 795-1919.Share this post on: Connect with us on: