Question: Does a buyers’ market mean it’s the right time for an individual person to buy?

Answer: A decrease in existing home sale prices, low mortgage rates and an increase in the number of homes listed for sale have created what some are calling a buyers’ market.

That can be good news for potential homeowners.

But buying a home is easily one of the biggest purchases of your life.

It’s important to have an understanding of what it really means to be a homeowner before you decide if now is the right time for you.

Question: What makes this a good time to buy a home in Calgary?

Answer: While MLS sales in May were 11 per cent higher than the same month last year, there are still many homes for sale in the city — and they’re available for less than in 2008.

This May, the total average residential price dropped 8.7 per cent compared last year, so your homebuying dollar would go further.

In addition, interest rates are at an all-time low.

Lenders are providing fiveyear fixed mortgages at around four per cent, while short-term variable mortgage rates are being offered just below that.

A lower mortgage rate reduces the amount of interest paid over the length of your mortgage.

That means more of your money goes towards paying off your home faster. revor Gloyn, general manager, Prairies and Territories region of Canada Mortgage and Housing Corp., answers these questions pertinent to today’s homebuyers:

Question: Can Canada’s Economic Action Plan help you buy your first home?

Answer: Yes. Canada’s Economic Action Plan, developed by the federal Harper government to help our country rebound from the economic downturn, offers attractive incentives for first-time homebuyers:

First-Time Home Buyers’ (FTHB) Tax Credit — It is hard enough to save money for a down payment without having to worry about other home buying costs such as legal fees, disbursements and land transfer taxes.

To help with these closing costs, the Government of Canada is providing up to $750 in federal tax relief for eligible individuals who purchase a home after Jan. 27, 2009.

Home Buyers’ Plan (HBP) — If you need extra funds to make your dream of homeownership a reality, the federal government is providing first-time homebuyers with greater access to their RRSP savings.

You can now withdraw $25,000 (increased from $20,000) per person. This applies to withdrawals made after Jan. 27, 2009.

Home Renovation Tax Credit — If you buy a “fixer upper,” this is the year to do kitchen renos, build a deck or lay new flooring.

You can get a 15 per cent income tax credit for labour and goods purchased to complete many different renovation jobs before Feb. 1, 2010.

The credit may be claimed on eligible expenses exceeding $1,000, but no more than $10,000, for a total credit of up to $1,350.

For more information on Canada’s Economic Action Plan, call 1-800-O-Canada, or visit the website at www.cra.gc.ca.
Question: How do know if I can afford to buy a home?

Answer: Good question! Calgary offers a great mix of new and used home styles at varying prices to choose from.

The one that’s right for you is the home that suits your lifestyle and your budget.

Purchasing a home that places unnecessary stress on your finances could compromise the lifestyle you currently enjoy.

So, how do you know that you’re financially ready for homeownership?

Take the time to calculate your current household budget and any monthly debt payments you already make.

This information will provide a snapshot of your actual financial situation, and can help you decide how much house you can realistically afford.

As a general rule, your maximum monthly housing costs (including mortgage principal and interest, taxes and heating) shouldn’t add up to more than 32 per cent of your gross household monthly income.

In addition, your entire monthly debt load shouldn’t be more than 40 per cent of your monthly income.

Once you have a sense of what you can afford in monthly housing costs, it’s a good idea to select a lender and ask them to pre-approve you for a mortgage.

This lets you know in advance what price range you should have in mind when you are shopping for your new home.

It also saves you time when you find the right one, which can give you an advantage over other interested buyers.

Check out the mortgage calculator at www.cmhc.ca to help you estimate what you can afford.

Question: Are Canadian lenders more particular about who gets approved for a mortgage due to the current economic conditions?

Answer: Lending institutions in Canada have always been vigilant about mortgage approvals, which is one of the reasons why Canada is better equipped to weather this economic downturn.

The same rules that have always applied are still in effect today. Those potential buyers who have done their homework, can prove that they are prepared for the financial reality of homeownership, and have an adequate down payment, will likely be approved for a mortgage.

Question: I heard that a 20 per cent down payment is often required. What if I don’t have that much?

Answer: For most people, the hardest part of buying a home, especially a first home, is saving for the down payment.

With CMHC mortgage loan insurance, you can purchase a home for as little as five per cent down.

While protecting lenders against borrower default, mortgage loan insurance also enables you to realize your dream of homeownership.

CMHC offers mortgage loan insurance on various property types including single-detached, duplexes, condominiums, and mobile homes. Visit www.cmhc.gc.ca for complete details.

Even when market conditions are working in your favour, the right time to buy is a personal choice.

Before you make the leap into owning your home, have a clear understanding of what it will cost and what you can afford.


Knowing what you’re getting into today will ensure that you enjoy many happy years in your new home.