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With all the focus and media attention given recently to changes in the mortgage rules, one very important change went virtually unnoticed and this change will have a significant impact on self employed mortgage applicants. Effective April 9, 2010 the loop hole that allowed the self employed to purchase property based on “stated” income versus “proven” income is essentially closed, with limited exceptions. The “stated” income product used for qualifying purposes was widely used, given the propensity for the self employed to show minimum personal income for tax purposes. The self employed will now need traditional third party validation of income.

This change along with those previously mentioned in my blog, How Do The New Mortgage Rules Affect You? will have a substantial impact on the local real estate market. Fewer individuals eligible to qualify for mortgages will result in a softening real estate market.

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