...A New House - Economy James Sathre University of Phoenix XECO/212 Anna Gonzalez, Ph.D. September, 3 2013 Buying a house is a large financial decision. Taking on that kind of debt can be a large burden or it could be a blessing. When you buy a house you trade a payment for stability and ownership or,you over spend. Your decision has to based on what you can afford and what the economy is doing around you. When my wife and I bought our house 4 years ago we were able to deduct the interest from our payments on our yearly taxes, allowing for a larger refund and helping us create more equity in our home. It was always a pleasure to get that check and think about what project we wanted to do next. But that has all changed because of the lift on the Bush tax cuts. When this happened it heightened the amount of money that is taken from our checks, taken the child tax credit away from us, and we cannot deduct our yearly interest paid. There are people that look to that refund based on what they have to pay in or just to buy necessities. My in-laws are traditional blue collar people. They make just enough to live well but also just enough to have to pay in to the government every year, rather than get a check back. So they are continually looking for new ways to find deductions on their taxes. With the tax deduction on mortgage interest paid gone, there is one less way to help them lower their payment to the government. For some people loosing this deduction could...
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...A New House-Risks and Benefits Jocelyn D. Mack XECO/212 March 13, 2016 Angela Semexant A New House-Risks and Benefits The housing market of the United States is still a volatile issue with many Americans that want to become home owners. With the housing market depression of a couple of years ago, there are many different factors that contribute to a person’s ability to be a home owner. The Federal Reserve is the main controlling body of the government that decides if interest rates for borrowing money for any reason including home loans moves either up or down. The Central Bank and the Federal Housing Finance Agency play active roles to either increase or decrease the demand for housing. It is the cycle of supply and demand of available monies, mortgage rates, and housing prices. When the Federal Reserve either holds the interest rates or move them downward, the demand grows in the housing market. This is considered a monetary policy stimulus overseen by the Central bank and the FHFA. The consumer has more buying power for the size home they want to live in to raise their family or as an investment in their later years. Today’s housing market is offering up any number of price points in either present homes on the market, or new housing starts. The job market has somewhat stabilized with unemployment being at a very low point. Two income families have begun to move upward in their earning power with contributions from retailers holding their pricing on everyday...
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...A New House Buying a new home is not to be taken lightly. Buying a new home is going to be one of the most important decisions a person or a couple will make in there live. To buy a home is not something a person does every day. Millions of Americans consider buying a home, is taking the next step in life. Make sure that it is the next step that you want to take. The decision to purchase a new home in today’s real estate market is a considerably difficult decision to make after weighing the advantages and disadvantages. The current real estate market dictates that today is a perfect time to buy a home as prices are low and interest rates are at all-time lows as well. The real estate market is typically broken into two markets; a buyer’s market and a seller’s market. In a buyer’s market, sellers stand to lose some ground in the bargaining process because a larger number of homes on the market offer buyers a wider selection of homes to choose from. In this situation, buyers have a comparative advantage over sellers because buyers can demand incentives from sellers to close the transaction or find another agreeable seller. When purchasing a home you need to ask a lot of questions before deciding to a home. Some of the issues would be readiness, financial, and emotionally ready to buy a new home. You must also look at your budget, like your income, savings, and insurance. You should make sure that when buying your home you are ready for the long haul, because...
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...Xeco 212 Checkpoint: a New House – Readiness Checkpoint: A New House – Readiness Leonard Sugue University of Phoenix XECO 212 Economic Theory Audra Sherwood February 17, 2011 A New House – Readiness Deciding to buy a house is a lifelong goal for many people. Imagine that you are renting a studio apartment and have just discovered you are having a baby. Your present apartment is small and far from schools and local services. You have decided to move. There are many factors that come into play when making such a large and weighty purchase. Examine the decision-making process from the perspective of an economist. In your Final Project, you use these principles and other factors to make a final decision whether to buy a house. Purchasing a home for the first time can be overwhelming. A house can be the largest investment someone makes. It can provide advantages, but it can present disadvantages as well. The following principles can be used when deciding to purchase your first home: People Face Trade-offs (Mankiw, 2007) The Cost of Something Is What You Give Up to Get It (Mankiw, 2007) When deciding to purchase a home, the principle “People Face Trade-offs” can be applied to help make a final decision. Making decisions requires trading off one goal against another (Mankiw, 2007). The buyer must sacrifice a little to gain a lot. First time home buyers must realize that it takes a lot of money to purchase a home. Buyers must sacrifice...
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...A New House and the Economy XECO/212 A New House and the Economy The decision to purchase a new home is a significant one to say the least. With the current conditions of the economy the decision should be calculated down to the very last detail. The consequences of purchasing a new home will have a direct affect on the rest of your life, so the choice to purchase a new home should be one made with confidence and plenty of knowledge. You must take into account all the variables that will come into play such as the economy, the market, interest rates, housing prices, and most important your financial and employment status. The current status and strength of the economy and your personal standings will affect the marginal benefits and costs in the decision of purchasing a new home in many ways. One aspect is how well your finances are and how they may be in ten or twenty years and will you have job security still in place in as little as five years. This long term purchase will also be affected by the marginal costs and benefits of purchasing the home. The marginal costs would be the payment, the insurance, the maintenance and the interest rate. The marginal benefits would be that this purchase is an investment if the circumstances are right, the economy is healthy and your job is secure. The location in relation to schools, jobs, and other daily activities will also play a part in the decision and its benefits (Mankiw). Currently the housing interest rates are low...
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...A New House - Risks and Benefits XECO/212 When to deciding to buy a house is a lifelong goal for many people. Imagine that you are renting a studio apartment and have just discovered you are having a baby. Your present apartment is small and far from schools and local services. You have decided to move. There are many factors that come into play when making such a large and weighty purchase. Examine the decision-making process from the perspective of an economist. In your Final Project, you use these principles and other factors to make a final decision whether to buy a house. Purchasing a home for the first time can be overwhelming. A house can be the largest investment someone makes. It can provide advantages, but it can present disadvantages as well. The following principles can be used when deciding to purchase your first home, “People Face Trade-offs” (Mankiw, 2007) or “The Cost of Something Is What You Give Up to Get It” (Mankiw, 2007). When deciding to purchase a home, the principle “People Face Trade-offs” can be applied to help make a final decision. The making of the decisions requires trading off one goal against another (Mankiw, 2007). The buyer must sacrifice a little to gain a lot and a first time home buyers must realize that it takes a lot of money to purchase a home. The buyers must sacrifice things such as vacations, movies, special occasions, and extracurricular activities to save money. The money you save is important to provide the down payment, home...
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...A New House – Decision Dolphinette Williams XECO/212 August 14, 2011 Hamsa Wilson Purchasing a home is one of the most vital choices one can make in their life. It is an exceptionally suitable area for the principles of economics to be taken into account to bring forth a good decision. This method calls for evaluation of marginal benefits and marginal costs. It also demands that one would consider their individual pros and cons attached to the decision. Personally, one would take their own family’s needs and welfare into thought during this course in their lives. Five of the principles well suited to the guiding of a home purchase are: “People Face Trade-offs”. Most people have to make choices in their lives if they are going to purchase and pay for a new house. Then we have “The Cost of Something is what you Give Up to get it”. The next principle that is believed to be relevant to purchasing a home is “Rational People Think at the Margin”. In order to make a successful action plan in this situation there are marginal changes that would have to be made (Mankiw, 2007). The last two principles that would be used here are “People respond to Incentives” and “Trade Can Make Everyone Better Off”. There are a large variety of incentives that prompts one to make a home purchase. Some of these incentives are instant and some are long-standing advantages. One would want to think about price as one of the largest factors in their choice for a home purchase. One would want to...
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...A new House - Risk and Benefits Leatrice McKibben XECO 212 September 25, 2011 John McGee A new House - Risk and Benefits There are many government bodies that control the housing market; HUD, Fannie May, House of Representatives, and Senate. The Federal Reserve Bank, even though not a government office but a group of private corporations, independent from the government but very much in control of the government, has the power to control what the interest rates will be and how the economy is ran. The major factor that determines what the Federal Reserve will do is the Prime lending rate. This rate determines if banks, mortgage companies, and other lenders can borrow money from the FED. For example; construction companies can barrow from banks to build more houses. The higher the interest rate, the higher home prices will become because of the cost of borrowing. When prices get to high, people cannot borrow money to buy them or to build them. The risk of buying a home does not know what the FED will do next. Will it raise or lower the interest rates and how long will it take to affect ones mortgage. The benefit of buying a home is that one can shop for the lowest interest rate and get government funding to help with the down payment and other housing lending cost. My recommendation for buying a home would be that one looks at the last few years of the housing market in the location of where one plans to buy. One could ask these questions; what is the current market value...
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...A New House XECO/212 April 6, 2012 A New House A new house is an important financial decision. Many factors need to be considered before beginning the process of purchasing a house. If all aspects of the purchase are not considered, any mistake can have dire financial consequences. One thing to consider before purchasing a house is the current mortgage rate and the forecast of the mortgage rates in the near future. Right now mortgage rates are at an all time low. With the mortgage rates at a low point, this means that the purchaser will spend less money in the long run. The mortgage rate will not stay low for a very long time. The mortgage rates are expected to rise again in the near future. In as little as a year from now, the average mortgage rate is expected to rise from 4.5% to an average of 5% (Yun, 2011). The purchaser needs to consider government agencies and their policies that will affect the housing market. The main government agency to consider is the Federal Reserve. The Federal Reserve is the agency responsible for setting the rise and fall of interest rates and how much money is to be available to purchasers. If less money is available to purchasers and people are not able to obtain enough funds to purchase a house, the prices of houses will drop. On the contrary, if there is more money available the price of homes will rise to maximize profit for the seller. In my opinion, the investment of buying a house is a wise one considering...
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...Administration is responsible for insuring bank loans for home buying. Considering purchasing a home, it is important to know if the interest rate is important to know if the interest rate is relatively low compared to others; as well as if getting a fixed rate rather than a variable rate which can fluctuate at any time. When making the final decision of purchasing a new home, there are many factors to take into consideration and how risk and benefits may have an impact on the final decision as well as the current state of the economy. Knowing what you are looking for and what to expect to find out about all the risks and benefits when finding the place. Certain cycles of the economy will benefit the buyer and during other times, it mainly benefits the seller. Making sure to consider the marginal benefits and cost tied to purchasing a new home will assist a person that is purchasing his, or her new home during a positive time in the market as well as the economy. Marginal benefits are the benefit changes over the quantity change and marginal costs, which are the cost change over quantity change. For example, buying a new house during a recession would not be too beneficial because the benefits are out-weighed by the marginal cost. During a...
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...Purchasing a new home is a major decision requiring a substantial financial outlay where the wrong decision could have long-term financial consequences. In addition, two principles that play a major role in this decision include principle number two the cost of something is what you give up to get it, and principle number three rational people think at the margin. The role of principal number two the cost of something is what you give up to get it, puts in perspective what a person must give up to purchase a home. For example, most people have to give up frivolous spending to save money for a down-payment. This includes buying expensive groceries, going on vacations, and buying brand new vehicles. Generally speaking, people give up their normal spending habits and live below their means for a period of time. Principle number three rational people think at the margin also plays a large role in the decision to buy a home. For instance, people do the best they can to achieve their goals given the opportunities they have. In the case of buying a home people will think at the margin and decide that buying a home is not only a place to live but an investment. Both principal’s influences the marginal benefits and marginal costs associated with the decision to purchase a home. For example, some houses are in foreclosure and are examples of how banks think at the margin. For instance, instead of selling the house at the market price banks often sell the house at lower prices to decrease...
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...MY NEW HOUSE XECO/212 PRINCIPLES OF ECONOMICS 7/25/2012 Many of the decisions we make as consumers are directly related to the current state of the economy. Moreover, as consumers are faced with life changing purchases, they will weigh the marginal costs and benefits associated with their purchase. This is most apparent when there is a decision to purchase a new home. Throughout this paper I will explore the economic principles that directly relate to this type of purchase, as well as identify the contributing factors that help shape the strength of our economy. The decision to purchase a new home can be a daunting and challenging choice. As current homeowners will testify, various factors will contribute to this life-changing decision. One of these factors includes trade-offs, which they will face before and after their purchase. This trade-off is one of the fundamental principles of economics; stating that we must give up something to receive something else. For a perspective homeowner this trade-off can be a reduction in the amount of available purchasing power. Once the purchase has been completed, the homeowner would be required to spend any extra money on their mortgage payment. Or for a couple who travels, it could be the loss of multiple vacations to popular destinations around the world or for someone like me who enjoys getting massages on a regular basic it would become no more. Moreover, this first principle defines that every decision...
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...A New House – Risks and Benefits Terrance Lundy XECO/212 1/19/13 The national fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy. They also find influences the economic status in order to affect the rates of the housing market. I don’t believe there are too many different government bodies that have a big effect on the national fiscal policies but one of the main ones to influence is the Federal Reserve which determines the direction in which the interest rates will go. This means that they control whether they rise or fall. When there are lower interest rates it will increase the demand for houses in the market. This is when is the most predictable to buy a house because they are not as much as it would normally be. Federal banks can affect mortgage rates and housing prices because they decide how much interest rates will be. This will be then change the mortgage rates as well when the house is all paid off. You do not want to be paying more than the house is actually worth so mortgage rates and interest rates are something you have pay attention to. During the economy now if anyone has the opportunity to buy a home they should do so because it is lower than it is at most times of the year. All of these play a big role in decisions to buy houses because wrong choices mean financial consequences for a long period of time. You have to make sure the market is good to buy a house to you get the best...
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...The decision to buy a house should be an important, far reaching financial decision for any individual. Within this assessment I will show that a number of different economic principles are utilized in making the ultimate decision to purchase. Of course, some people may buy using a gut feeling or buy on a whim, but the educated economist will consider, at least, trade offs and the marginal cost and benefits involved with the purchase. Government incentives to purchasing a home would also be considered as well as the government’s control of the economy. This would cause the strength of the overall economy to impact any large purchase, especially one as substantial as a home purchase. After all, this could be the single largest purchase I could quite possibly ever make. I will take into account all of these areas in determining what the best course of action is for my individual situation at this time. Most people consider the trade offs required to purchase a home to beginning when the home is purchased. While there certainly are trade offs to be made after the purchase, there are several to be considered in just making this financial decision. Since almost all real estate loans require some down payment, trade offs begin when I start saving to buy a house. Decisions I would have to make like “Should I go on vacation or invest the money for my down payment”, begin long before the purchase of real estate. Current satisfaction versus long term satisfaction is the major trade off...
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...A New House- Risks and Benefits Delta Darr XECO/212 October 30, 2011 Don Mac Lean A New House- Risks and Benefits Some of the government bodies that influence national fiscal policies that potentially affect the housing market are for one the Federal Reserve System this is often referred to as FED. A few others are FHA, FEMA, and Housing and Urban Development which is often referred to as HUD. Some of the national fiscal policies that can affect mortgage rates, housing starts, and housing prices are for one and I feel is the biggest one is the lending rate. Are we as lenders able to borrow the money to finance a mortgage? Also the interest rates of these loans, if the interest rate is too high then we will not be able to borrow the money to finance a mortgage. I think that when it comes time for you to buy a home it will be one of the biggest and most important decisions that you are going to make in your life. This is something that you do not want to jump into without doing a lot of thinking and planning beforehand. This for most people will be the biggest purchase that they will make in their life time so you really need to weigh your options. If you buy a home you have a place that you can really call “your home”. You are not wasting money on renting a place that will never in the end truly be yours. Now if you are buying a home you become your own landlord, you are the one that has to pay to get things fixed. Also your can lose value on your home. So see buying...
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