Here we are in 1996. Spring is just around the corner. With spring comes home buying dreams. The old adage "don't wait for spring, do it now" has never been truer. Mortgage rates below 7% will avail you the possibility of buying a home and paying less than rent. Let me give you an example...

that condominium townhouse you are renting at $945 per month is selling for around $84,000. If you were to put down $4200 you could finance the rest at payments of $575 per month (including the CMHC high ratio insurance cost). You must add to that the condo fees and taxes totalling $330. You are already paying the heat so that won't change. Imagine, you buy the place and end up paying $40 less per month than when you were renting.

Now do we want to buy a home? The reason we ask the question is one of personal choice. Do we want the responsibility of home ownership? My answer to that is simplistic. If we can afford home ownership, eventually our home will be paid. Once the home is paid, you now only have to pay for costs, such as condo fees and taxes. If you remain renting, you will never get rid of the largest chunk of your disposable income....rent. If it costs you no more to own than it does to rent, then that should be decision enough to buy.

There are other costs to home ownership. You must, of course, have money to pay for the legal fees, the appraisal fees, the land transfer tax and the like. All that stuff should not exceed 3.5% of the purchase price. Depending on where you buy, and from whom you buy, there may be a way of getting the Vendor of the property to pay for all that. Now is the time to seek out the deal of a lifetime, with real estate Vendors so anxious to sell, and there being so few buyers, you can indeed dictate terms that are most beneficial to you. Let's address the downpayment issue...

DOWNPAYMENT SOURCES

The downpayment on a home, if this is your first purchase, is only 5% of the purchase price (ie $4,200 down on a $84,000 purchase). This 5% cannot be borrowed unless it's from your RRSP, or against an identifiable asset. The downpayment may be:

a) cash accumulated in the bank over at least the last three months. Lump sums deposited to the account within the last three months may be queried.

b) a gift from an immediate relative (mother, father, sister, brother). A letter from the benefactor must accompany the gift, as well as a copy of the gift cheque. This letter must indicate that the money is indeed a gift and that it does not have to be repaid.

c) a loan from your RRSP (if the vehicle that has your RRSP will allow it). This loan must be repaid to your RRSP over the next 15 years in equal yearly payments of principal.

d) a loan against an asset such as car, boat, bonds, term deposits etc. as long as the lender of this loan is prepared to acknowledge that they are "fully secured", and that the payments on this loan are indeed being represented on your application, and calculated in your debt service ratios.

e) accumulated cash in an "OHOSP"(Ontario Home Ownership Savings Plan) account.