New Insured Lender Policy & How it Affects Mortgage Renewal Time

Most banks/lenders have just announced to brokers a change in their policy and guidelines. I wanted to share this news with you all in case it will affect you when it’s renewal time. In this article, we’ll chat about the new policy and what it means for those with a current mortgage. 

The new policy. 

The changes to the new insured lender policy and guidelines will affect transfer programs.

What this means to the transfer program. 

Effective immediately, most lenders will qualify insured transferred and insured collateral transfers using the contract rate. This includes: 

• A transfer of an existing insured loan where the borrower paid the default insurance 
• The amortization cannot increase and must stay the same as the original terms of the mortgage 
• No more than $3,000 in penalty or fees can be capped onto the mortgage during the time of the transfer.
• Insurance and uninsurable transfers will be qualified on the higher of the minimum qualifying rate or contract rate +2%.

What you should know about renewals. 

When you choose a fixed or variable rate mortgage, you choose a term where you are guaranteed a certain discounted rate. Once that term is near completion, normally your bank will send you a letter stating your renewal date and the rates you would be eligible for if you were to renew with them.

If you still owe a balance, you will need a mortgage renewal for another term. With each renewal, comes the opportunity to assess your current mortgage and compare it to your future goals as well as competitive rates. 

If you’re in need of a mortgage renewal, it’s time to understand the process and what you should do and look at to see if you can qualify for a better rate. 

I wrote a full article explaining all of this, so please read “Information on Mortgage Renewals” to learn all of the details. 

How does this affect you?

I understand how hard it can be to read through this type of information and not fully see how it would affect your mortgage situation. Lenders and brokers use terminology that isn’t as common to mortgage clients, so here’s your answer! 

What this means is if you put less than 20% down on their purchase and paid Lender insurance, and want to switch to a new lender at renewal, you won’t have to qualify under the stress test.

Are you up for renewal soon?

If your mortgage is up for renewal soon and are wondering if this will affect you, please reach out to me today. We can go through your current mortgage policy and I can guide you on your next best steps.
Give me a call at 250-826-3111, apply on my website or contact me through my online contact form.