What is the Stress Test & How it is Eroding YOUR Purchasing Power
The stress test is a government-mandated guideline that lenders use to determine what borrowers qualify for when buying a home or investment property. It requires borrowers to qualify at a higher interest rate, even if they are getting a lower rate at the time. The purpose of the stress test is to ensure borrowers can still afford their mortgage payments if interest rates increase. However, the stress test rate can potentially erode purchasing power, especially in a market with rising interest rates. To maximize purchasing power, borrowers can consider getting a variable rate mortgage and then locking it in to a fixed rate once they take possession of the property.
Takeaways
- (00:00) - Introduction and Purpose of the Show
- (01:01) - Explanation of the Stress Test
- (09:44) - Maximizing Purchasing Power with a Variable Rate Mortgage
- (13:57) - Importance of Pre-Approval and Timing
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Takeaways
- The stress test is a government guideline that lenders use to determine what borrowers qualify for when buying a home or investment property.
- The stress test requires borrowers to qualify for a higher interest rate, even if they are getting a lower rate at the time.
- The purpose of the stress test is to ensure borrowers can still afford their mortgage payments if interest rates increase.
- To maximize purchasing power, borrowers can consider getting a variable rate mortgage and then locking it in to a fixed rate once they take possession of the property.
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