Every so often, something happens that really changes how everything is done. The economic crash of the mid-2000s was the equivalent of 9/11 for the banking industry, with the mortgage industry in the role of the two towers. While life did carry on afterwards, there are certain parts of the real estate industry that will never recover or be seen again. Alternative means of securing money to buy Bay Street condos and other properties are now sought after more than ever before.
Not only are there more options, and more popular options, when it comes to real estate today but there are also new rules about just how one can go about getting a mortgage. Some of these rules are in place at the federal level, some have come about as banks and private mortgage lenders rethink their approach to loans.
Among those changes are a few which may directly affect you as you seek to secure the money you need to buy a Toronto condo or other property in Canada or in the United States. In the United States, the most significant change is that to down payment regulations for the first time home buyer.
Back under Clinton (yes, that's right, we said Clinton, not Bush Jr) mortgage laws in the States were changed so that everyone had better access to the American dream. In other words, they didn't have to put nearly as much money down to qualify for a loan as they did in the past. This led to many people buying houses they could barely afford, with mortgage payments too hefty to take care of each month.
And we all know what happened ten years later, when the free for all buying spree came to a crashing halt. In order to prevent that from happening again, both the Bush and Obama administrations have had to reverse the government stances on down payments, making a higher percentage required once again.
Did a similar thing happen with mortgages in Toronto and other areas of Canada?
No. If you can believe it, many Canadians are still buying homes without putting enough money down. This has led some to predict a similar crash in Canadian real estate within a few years; whether that will pan out or not is something we will have to wait to see.
What has changed in the Canadian mortgage industry is that lenders are taking an even harder look at personal credit ratings before approving loans. Any suspicious actions, such as cancelling a credit card or being late on a payment of another loan, might get you disqualified from consideration. So be careful with what you do with credit in the months leading up to your mortgage application.
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