Here are some answers to your questions. Provided to me directly from the lender rep. As you can see the lenders are scrambling to see exactly how they will deal with the minute details… but this following is the absolute latest as of today:
Q: Can you comment in more detail on how the TDS will now be calculated?
A:50% OF RENT WILL BE ADDED TO INCOME WHILE SERVICING PITH (Principal+Interest+Taxes+Heat) AND 1/2 CONDO FEES FROM ALL PROPERTIES AND ALL DEBT ON BUREAU.
Q: How will CMHC treat expenses and income from properties other than the subject one?
A: ACTUAL EXPENSES FROM THE RENTALS WON’T BE A FACTOR AS FAR AS WE KNOW. REMAINS TO BE SEEN AS POLICIES CONTINUE TO CHANGE
Q: If they have positive cashflow, will they not be incorporated into the calculation?
A: IT WON’T REALLY MATTER IF THE PROPERTY HAS POSITIVE OR NEGATIVE CASH FLOW AS WE HAVE TO SERVICE THE FULL PITH + HALF CONDO FEES ANYWAYS.
Q: Or if they are, how? How are expenses treated?
A: THEY’RE A NON FACTOR – (PITH + 1/2CONDO FEES)
Q: How is revenue treated?
A: 50% OF RENT ADDED TO INCOME
Q: I read somewhere that gross income will be determined by your notice of assessment and rental income would be included in that.
A: LENDERS ARE STILL ASKING FOR JOB LETTER AND PAY STUB FOR EMPLOYEES OF COMPANIES SO RENTAL INCOME/DEFICIT ON THE TAX RETURNS WON’T BE A FACTOR IN THAT CASE. IF YOU’RE BFS, THEY ASK FOR NOA’S & T1 GENERALS TO SEE THE SOURCE OF INCOME. I WOULD IMAGINE THE LENDERS WILL DEDUCT THE RENTAL INCOME SHOWING ON THE TAX RETURNS AS WE WOULD’VE ALREADY ACCOUNTED FOR IT IN THE 50% ADDBACK. IF THERE’S A DEFICIT, THAT REDUCES THE BFS INCOME.
Q: If that is the case, will the PITH calculations include only your principal residence and the subject property?
A: IT WILL BE ALL PROPERTIES YOU OWN
Q: Or will they use all obligations of PITH from all properties? If it is the latter, then things become problematic, particularly if you show 0 of close to 0 for your rental income.
A: MOST T1′S I’VE SEEN SHOW A DEFICIT IN THE RENTAL INCOME SO I DON’T THINK THINGS WILL REALLY CHANGE ON THIS FRONT.
Q: How will CCA come into play?
A:NOT A FACTOR
Q&A With a Top Mortgage Broker was last modified: April 26th, 2010 by admin