Over the past few months, we have been looking at the technical part of mortgaging. Today, let's look at the practical side. We Canadians are so influenced by interest rate fluctuations that the rate hike of 2.5% since the beginning of the year has killed the market place. Builders, to move their product, are back to 1990 tactics....buying down interest rates.

Consumers were indeed turned off from purchasing homes (especially first time buyers) when all of as sudden, the interest rates grew so quickly. Most potential home buyers do not see that interest rates are still at an all time low. As a home owner, renewing my mortgage at less than 10% is fantastic. All they see is the media hype that the rates have gone up by 2.5% since the beginning of the year. I submit to you that if rates had gone up gradually to where they are right now, people would still be buying. This would have been the best real estate year in the last 10. Alas, rates did go up, and went up in a hurry. The reasons are really unimportant. What the Consumer should be looking at is interest rates at less than 10% for a five year term! It is a great rate! The average five year term rate since 1971 has been greater than 10%. If only the news media in this city would reinforce that fact, maybe, just maybe, the resale market would allow home values to appreciate.

To find out how much it would cost you to own at a 10% rate, take the number of thousands of dollars you require on a mortgage and multiply that amount by 8.95 to arrive at a monthly mortgage payment. In other words, if you require a mortgage of $99500, you would multiply 99.5 by 8.95 to arrive at a payment of $890.53 per

month. To see how much money your rent payment could afford, you take the rent amount, let's pretend it's $875, divide it by 8.95 to arrive at 97.77 which relates to $97,770.

Now, the only excuse for not buying a home is the mandatory down payment. Some exciting modifications to the first time buyer 95% mortgage plan are noteworthy. 1) first time buyers are defined as not owning a home in the last five years, (2) only one spouse needs to qualify, (3) if a divorced person has only 5% down coming out of a matrimonial home, (4) if you have lost money selling your last house, you may qualify, (5) if you must relocate to find employment, you may qualify. Canada Mortgage and Housing Corporation (CMHC) must approve all applicants under the 95% plan.

The downpayment may be: 1) cash, or other negotiable instruments,

2) a gift from a close direct relative, (3) a loan from your RRSP holdings (4) a loan against a real asset (car, boat, lot, and the like). There are additional costs of purchasing a home which we have noted over the last few weeks.

The best plan to pave the way to financial independence is to own your own home, mortgage free. You should start today. The rates are low, the down payment minimal, and the market is prone for a great deal. Make your call today to get prequalified for a mortgage, choose your real estate agent and get to buying that home of yours while the getting is good.