Spring has finally arrived in Manitoba and many people begin to think of the pleasures of time spent in their yards doing yard work and relaxing in our beautiful Manitoba summers. This does encourage many people who are renting to dream and plan for a home and yard of their own. With these thoughts in mind it is important for the potential home buyers to be aware of a critical deadline that is fast approaching.
CMHC (Central mortgage and Housing Corporation) announced some time back that as of May 1, 2014 their insurance premiums will be increasing in particular for the 5% down payment buyer from 2.9% to 3.15%. This increase will have an impact on the monthly mortgage payment and also on the amount the bank will approve for the purchase price of a home.
Following is a quote from the CMHC website.
“Mortgage loan insurance helps protect lenders against mortgage default and enables consumers to purchase homes with a minimum down payment of 5% with interest rates comparable to those with a 20% down payment. Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price.
Effective May 1, 2014, CMHC is increasing its homeowner mortgage loan insurance premiums to reflect its increased capital targets. The increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums.
For the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market.”
Should you be considering a home purchase, you may want to talk with your bank and Realtor very soon. Possession of the home does not have to occur by May 1, 2014 but the full application, including the offer for the home must be processed and approved by CMHC by May 1, 2014. Many buyers and sellers agree to possession dates that are 60 to 120 days away from the date of the offer, with some people agreeing to even longer dates between the completion of all approvals and the date of possession.
As spring approaches consider investigating the Real Estate Market whether you are a buyer or a seller.