{"id":1194,"date":"2019-04-17T16:34:04","date_gmt":"2019-04-17T16:34:04","guid":{"rendered":"https:\/\/mymortgagepros.com\/?p=1194"},"modified":"2024-02-08T05:46:05","modified_gmt":"2024-02-08T05:46:05","slug":"what-stress-test-of-your-mortgage-means","status":"publish","type":"post","link":"https:\/\/mymortgagepros.com\/what-stress-test-of-your-mortgage-means\/","title":{"rendered":"What stress test of your mortgage means?"},"content":{"rendered":"\n<h4>First look at a scenario now:<\/h4>\n\n\n\n<table class=\"wp-block-table aligncenter\"><tbody><tr><td><strong>S<\/strong>Your current mortgage is a five-year fixed-rate term. Your rate is probably at or below 3%. Let\u2019s use 2.89%, as many of my clients were averaging this rate back then. Five years ago, you were qualified using your actual rate. So, in this case, 2.89%. Let\u2019s say you took a 25-year amortization with an original balance of $400,000, equaling $1,871 in monthly payments. Today, your balance is $340,000. How much income did you need to qualify back then? $73,000 per year. Fast forward to today. It\u2019s renewal time and you\u2019re ready to shop for rates. Of course, your Mortgage Broker has contacted you or you\u2019re going to call an experienced Mortgage Broker to ensure you\u2019re getting the best rate and terms. Historically, we know that banks don\u2019t offer their existing clients the absolute best rate at renewal time. This is just the way it has always been. But, it\u2019s gonna get worse\u2026    \u00a0                                    <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p><strong>And now for some potentially bad news:<\/strong> Today, you heard about a better deal at a competing lender. Naturally, you\u2019ll qualify given that you\u2019ve paid your mortgage perfectly for five years, right? Well, not necessarily. Today you must re-qualify using your new rate (let\u2019s use 3.59%, as this is a competitive rate today) <strong>plus 2.00%<\/strong> (infamous stress test) for a <strong>qualifying rate of 5.59%<\/strong>. Using this new higher qualifying rate, regardless of the now shorter amortization and lower mortgage balance, you\u2019ll still need a higher qualifying income of $88,000. Think your bank doesn\u2019t know this? Guess again\u2026 they know, and they love it. And, chances are, you won\u2019t see the best rate offer come renewal time. (This is where I would strongly recommend speaking with an <a href=\"https:\/\/mymortgagepros.com\/\"><strong>experienced Mortgage Broker.<\/strong><\/a><strong> <\/strong>Having access to a variety of lenders in addition to banks.) <\/p>\n\n\n\n<h4>Now look at what at renewal:<\/h4>\n\n\n\n<p><strong>S<\/strong>It\u2019s renewal time and you want to increase your mortgage to buy a car, install new furnace\/air conditioner, renovate, or even send your kids to school. Perhaps you took out a loan or used your line of credit for some expenses you accrued waiting for renewal time. (And, of course, you\u2019re paying a higher interest rate as all non-mortgage debts have higher rates than your mortgage). <br> Using the same example as above, your current mortgage balance is $340,000, but you want to go back up to a $400,000 mortgage to roll in those other higher-interest debts.<\/p>\n\n\n\n<p><strong>To qualify for this same $400,000 mortgage amount, you originally started with five years ago, you\u2019ll now need to earn $108,000 per year.<\/strong> That\u2019s a $35,000 higher annual income \u2013 a 52% increase. Now, how does this make sense? It doesn\u2019t, but it\u2019s the new reality. There are calls for the government to pull back on the stress test \u2013 and for good reason. The example above is playing out hundreds of times a day across the country. Don\u2019t despair. There is hope. And there are solutions. Your interest is my only interest. <a href=\"https:\/\/mymortgagepros.com\/\"><strong>403-253-2022<\/strong><\/a><\/p>\n\n\n\n<p>At <a href=\"https:\/\/mymortgagepros.com\/mortgage-application\/\"><strong>MortgagePRO Ltd<\/strong><\/a> we are well qualified to give you free advice, come visit us for a quick 2 minutes pre approval, <a href=\"https:\/\/mymortgagepros.com\/mortgage-consultation\/\"><strong>Free quote<\/strong><\/a>, and now you can chat live to get answers on your most pressing questions you might have!<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"672\" height=\"368\" src=\"https:\/\/mymortgagepros.com\/wp-content\/uploads\/2017\/08\/mymortgagepros.jpg\" alt=\"\" class=\"wp-image-1010\"\/><figcaption>Best bet for best rate!<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>First look at a scenario now: SYour current mortgage is a five-year fixed-rate term. Your rate is probably at or below 3%. Let\u2019s use 2.89%, as many of my clients were averaging this rate back &#8230; <a href=\"https:\/\/mymortgagepros.com\/what-stress-test-of-your-mortgage-means\/\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What stress test of your mortgage means? - My Mortgage PRO - Calgary<\/title>\n<meta name=\"description\" content=\"Things to know on mortgage stress test, qualifying rate, amortization, renewal, refinance and apply for mortgage and how to apply at Mortgagepro are all new\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/mymortgagepros.com\/what-stress-test-of-your-mortgage-means\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What stress test of your mortgage means? 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