The Canadian Mortgage & Housing Corporation (CMHC) recommends:

Buying a home is one of the biggest emotional and financial decisions you'll ever make. Prepare by learning about the process of home buying and the responsibilities of homeownership. The differences between renting and buying a home are vast, and there's a long list of pros and cons for both options. And, remember - there is no one best decision for everyone. Before moving forward, though, here are some questions to consider.

Do you have the necessary financial management skills?

How financially stable are you?

Are you ready to take on the responsibility of all the costs involved in homeownership, including mortgage payments, repairs, and maintenance?

Are you able to devote the time required for home maintenance?

For step-by-step information on home buying click here.

Choosing your Realtor

Getting the right professional behind you is an important decision, you should look for someone who:

• Actually knows who you are unlike the lead of a team
• You can trust
• You are comfortable with
• Keeps up with the changing marketing landscape
• Is available for you

Things that are good to be familiar with

• Your monthly income.
• Your monthly debts and expenses.
• How much you have set aside for a down payment.

Gross Debt Service (GDS) ratio.

Your monthly housing costs shouldn't be more than 32% of your gross household monthly income. This includes mortgage principal and interest, taxes and heating expenses.

Total Debt Service (TDS) ratio.

Your entire monthly debt load shouldn't be more than 40% of your gross monthly income. This includes housing costs and other debts such as car loans and credit payments.

Closing Costs

• Land Transfer Tax
• Mortgage Insurance
• Legal Fees
• Title Insurance
• Home Insurance
• Adjustments

Home Buyers Tax Credit

For 2009 and subsequent years, the HBTC is a new non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27, 2009

The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000.

For more information, click here.

Conventional Mortgage

A conventional mortgage is a mortgage loan that is equal to, or less than, 80% of the lending value of the property. The lending value is the property's purchase price or market value - whichever is less. For a conventional mortgage, the down payment is at least 20% of the purchase price or market value.

High-ratio Mortgage

If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing.

Mortgage Term

Your lender will tell you about the term options for the mortgage. The term is the length of time that the mortgage contract conditions, including interest rate, will be fixed. The term can be from six months up to ten years. A longer term (for example, five years) lets you plan ahead. It also protects you from interest rate increases. Think carefully about the term that you want, and don't be afraid to ask your lender to figure out the differences between a one, two, five-year (or longer) term mortgage.

Mortgage Interest Rates

Mortgage interest rates are fixed, variable or adjustable.

Fixed Mortgage Interest Rate

A fixed mortgage interest rate is a locked-in rate that will not increase for the term of the mortgage.

Variable Mortgage Interest Rate

A variable rate fluctuates based on market conditions. The mortgage payment remains unchanged.

Adjustable Mortgage Interest Rate

With an adjustable rate, both the interest rate and the mortgage payment vary, based on market conditions.

Closed Mortgage

A closed mortgage cannot be paid off, in whole or in part, before the end of its term. With a closed mortgage you must make only your monthly payments - you cannot pay more than the agreed payment. A closed mortgage is a good choice if you'd like to have a fixed monthly payment. With it you can carefully plan your monthly expenses. But, a closed mortgage is not flexible. There are often penalties, or restrictive conditions, if you want to pay an additional amount. A closed mortgage may be a poor choice if you decide to move before the end of the term, or if you want to benefit from a decrease of interest rates.

Open Mortgage

An open mortgage is flexible. That means that you can usually pay off part of it, or the entire amount at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future. It can also be a good choice if you want to pay off a large sum of your mortgage loan. Most lenders let you convert an open mortgage to a closed mortgage at any time, although you may have to pay a small fee.

Amortization

Amortization is the length of time the entire mortgage debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run. If each mortgage term is five years, and the mortgage is amortized over 20 years, you will have to renegotiate the mortgage four times (every five years).

Payment Schedule

A mortgage loan is repaid in regular payments - monthly, biweekly or weekly. More frequent payment schedules (for example weekly) can save some interest costs by reducing the outstanding principal balance more quickly. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage.