Interesting finding about mortgages - anyone used that option?

[Nir]

Hi All,

I learned something interesting from an experienced banker last week:

You can get approved and put 25% down even if you are not working, i.e. between jobs. THEN, when/if you start working again say in 6 months, you can REDUCE the 25% downpayment to 5% by applying to genworth or CHMC then.

Has anyone used this option? how does it work technically? you get money from the bank you can do what you want with 6 months after the purchase, and the mortgage increases?

Thanks,
Neil

 

[RebeccaBryan]

Isn`t that just refinancing the property? As long as you`re following the banks rules.

 

[PeterKinchMortgageTeam]

QUOTE (investmart @ Jun 1 2008, 02:03 PM) Hi All,

I learned something interesting from an experienced banker last week:

You can get approved and put 25% down even if you are not working, i.e. between jobs. THEN, when/if you start working again say in 6 months, you can REDUCE the 25% downpayment to 5% by applying to genworth or CHMC then.

Has anyone used this option? how does it work technically? you get money from the bank you can do what you want with 6 months after the purchase, and the mortgage increases?

Thanks,
Neil


Its probably something that would work well on an owner occupied property where there are lots of NIQ options - not so well with rentals where there are very few NIQ options.

If the property is to be your principal residence, you would just put down your 25% as required under most NIQ`s and then in 6 months time when you can qualify, you refinance up to 95% to take out your equity.

 

[Nir]

Thanks Rebecca, I haven`t thought about it this way. I guess you`re right - it`s simply refinancing up to 95%!

Hi Peter, the banker knows it`s going to be a rental property I will not live in so perhaps it`s going to be one of the "very few NIQ options" you mentioned exist. On the other hand, I`m assuming NIQ stands for "No Income Qualifier" so not sure why you mentioned NIQ options(?) - as mentioned the banker suggested refinancing when/if you start working again, not as unemployed. (just the initial 25% as unemployed).. and this is not an NIQ case unless NIQ stands for something else
Am I missing something? THANKS.

Neil