As many of you know, stress rules will apply to all purchases including those with 20% down or more effective January 1 2018. Many clients will see an effective drop of 20% in their buying power which translates straight to a reduced purchase price. However, what happens with existing pre approvals?
Here are the rules that apply with a few of my lenders but not all:
Any preapproval committed prior to January 1st 2018 will remain valid for up to 120 days from the date of the original preapproval. Any extensions of an expired preapproval after December 31 2017 must be qualified using the qualifying rate based on the new rules.
Should a preapproval that was committed in 2017 turn into a real deal, the old rules apply even if the closing date of the new purchase is greater than the expiry date of the preapproval, but not greater than 120 days from the date of the commitment for the real deal.
Example; A pre approval committed prior to January 1 expires March 15, 2018. Borrowers purchase a property closing May 1 2018. If the real deal is committed on/before March 15th, we still qualify using the old qualifying rate rule. The rate is no longer protected as the closing is beyond the expiry date of the pre approval, however the old rules still apply for qualification, as long as the deal closes within 120 days.
This is a big opportunity so please contact me asap to get your pre approval in prior to January 1 2018. Any existing pre approvals that I have will be resubmitted next week to take advantage of this.