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New Government Policies and Challenges Applying for a Mortgage

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If you’re in the market for a new house, there’s a few things that have changed in the last little bit that you should definitely know and understand. The government has issued new policies when applying for a mortgage. To summarize what’s going on, basically the federal government now requires applicants to go through a stress test to avoid people from purchasing property they can’t afford. Essentially what happens when someone is looking to apply for a home loan is that the feds are going to investigate whether or not an applicant is able to make their monthly mortgage payments.

Looking to purchase a house? Assess your monthly income, how much debt you are in and how much savings you have. If you’re in a decent financial position keeping these points in mind, you should be okay to apply. If you have debt and are living paycheck to paycheck, it may be more difficult to invest in real estate. However, the only way to find out for sure is to start the home buying process… just be prepared for road-blocks if you know you may be struggling to take on a mortgage loan.

We’ve talked before about saving for a deposit, getting approved for a mortgage loan with no down payment, and the do’s and don’ts when applying for a home, but now we want to give you a heads up on other challenges home-buyers may face in the real estate process, especially in light of the new federal government policies.

It Isn’t Like the Pictures

When browsing through MLS listings, oftentimes the pictures are nothing like the real deal. An image of a room or the outside of the property is only a small glimpse as to what the interior/exterior actually looks like. To avoid disappointment, compile a list of properties that interest you and head to open houses or appointment viewings. Judge it by what it actually looks like rather than in the photos and narrow down your options that way.

Hidden Problems

Much like the previous point, pictures only say so much about a property. However, even when going to see the actual place for yourself, there could be hidden problems that aren’t easy to spot without digging really deep and of course, getting an inspector to investigate. Issues like mold, an old furnace, toilet leaks and asbestos are examples of some problems that aren’t easy to see but could be problematic if located. Make sure to take the necessary steps to avoid investing in a home that will require expensive repairs upon the discovery of these types of issues.

Not Getting Pre-Approved

As stated earlier, home-seekers now need to go through a “stress test” in order to purchase property. That’s in addition to getting pre-approved by a bank or mortgage broker. Basically, if you don’t have your finances in order, you’ll have a harder time getting approved. Much like the government, banks and brokers will pull your credit report and find out your income to debt ratio before giving you a pass to invest in realty. Before you consider purchasing property, make sure you have enough money for a down payment, savings in order to support your new investment, pay off most or all of your debt, and ensure you have enough income each month to make your mortgage payments.

There are many challenges you may face when looking to invest in property like hard to spot problems, disappointment when struggling to find the perfect real estate opportunity and the stress associated with not getting pre-approved. Unfortunately, buying a house isn’t as simple as black and white and it’s recommended to stay in the “grey zone” in order to avoid getting burnt out. But that’s why we’re here! We want to help you make informative decisions about your purchase, connect you with the right agents and help you get into a position to get approved for a loan. We’re the mortgage experts and we want to help! Get in touch today.

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