- Joined
- Oct 10, 2007
- Messages
- 601
Can someone explain this in more detail please. The followig is form the newsletter from today.
Thanks,
Todor
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3. Creative Mortgage Strategies
Peter Kinch
Your mortgage product should be utilized as a tool that helps you accomplish an end result. As such, it is critical that you learn about all the options available in order to know which tool to pull from the tool belt.
Recycle Your Down Payment
This strategy is designed to take advantage of the CMHC 2nd Home Program. This program is an extremely valuable tool, that when properly utilized can help you stretch your down payment dollars further. So let`s take a look at the program to begin with: CMHC 2nd Home Program Criteria. The CMHC 2nd Home Program allows you to purchase up to a 4-plex and qualify for high ratio financing provided you meet the following criteria:
[list type=decimal][*]The home or at least one of the units must be occupied by or have the intention to be occupied by you or a relative, within the next year.[*]You must qualify based on your verifiable income to service both this new mortgage and your existing principle residence mortgage under CMHC GDS/TDS guidelines.[*]You cannot use any of the rent garnered from your relative (in fact, they are supposed to be living rent-free) to help qualify for the GDS/TDS, but you can use up to 80% of the rent from the other units in the house.[/list type=decimal]*** CAUTION: You are in the CMHC sandbox so they will only consider 50% of any rental income from existing properties.
Example:
How to take a $43,000 down payment and use it twice in a market where values are continuing to rise:
"
Thanks,
Todor
"
3. Creative Mortgage Strategies
Peter Kinch
Your mortgage product should be utilized as a tool that helps you accomplish an end result. As such, it is critical that you learn about all the options available in order to know which tool to pull from the tool belt.
Recycle Your Down Payment
This strategy is designed to take advantage of the CMHC 2nd Home Program. This program is an extremely valuable tool, that when properly utilized can help you stretch your down payment dollars further. So let`s take a look at the program to begin with: CMHC 2nd Home Program Criteria. The CMHC 2nd Home Program allows you to purchase up to a 4-plex and qualify for high ratio financing provided you meet the following criteria:
[list type=decimal][*]The home or at least one of the units must be occupied by or have the intention to be occupied by you or a relative, within the next year.[*]You must qualify based on your verifiable income to service both this new mortgage and your existing principle residence mortgage under CMHC GDS/TDS guidelines.[*]You cannot use any of the rent garnered from your relative (in fact, they are supposed to be living rent-free) to help qualify for the GDS/TDS, but you can use up to 80% of the rent from the other units in the house.[/list type=decimal]*** CAUTION: You are in the CMHC sandbox so they will only consider 50% of any rental income from existing properties.
Example:
How to take a $43,000 down payment and use it twice in a market where values are continuing to rise:
- Purchase Price: $175,000
- Down Payment: $43,750
- Mortgage: $131,250 (*USE AN OPEN MORTGAGE)6 Months Later...Value increasesRefinance to 90% Using CMHC 2nd Home ProgramNew Value of Home: $195,000 *New Mortgage: $175,500.Cash back (less Legal Fees): $44,250.Effective Down Payment: ZERO!
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