A New House - Risks and Benefits

In: Business and Management

Submitted By Tam0555
Words 377
Pages 2
A New House - Risks and Benefits
May 13, 2011

A New House - Risks and Benefits
A few of the government bodies that influence national fiscal policies that potentially affect the housing market are: Federal Reserve System (FED), Housing and Urban Development (HUD), and the Federal Emergency Management Agency (FEMA). “The Federal Reserve System of the U.S. is the central banking system of the U.S., comprised of the Federal Reserve Board, the 12 Federal Reserve Banks, the Federal Open Market Committee, and the national and state member bank. Its Primary purpose is to regulate the flow of money and credit in the country” (InvesgtorWords.com, 2011). The federal secure interest affects variable interest rates of mortgages by using the interest only loans, which you just pay the interest and no principal, so when the housing price falls, refinancing is impossible. The reason refinancing is impossible, is because there is no equity or profit made and the house value diminishes and there is no way to refinance when the house is worth less than the mortgage amount. When the value of your home goes up, then you can refinance. The HUD Act affects mortgages for “single-family and multifamily dwellings and extending loans for home improvements and for the purchase of mobile homes; channeling funds from investors into the mortgage industry through the Government National Mortgage Association; and making loans for the construction of rehabilitation of housing projects for older and handicapped persons” (The Free Dictionary, 2011).
The best recommendation for buying a home is to purchase it at the lowest interest rate possible and to know what the taxes, monthly utility bills, insurance rates, maintenance, and other fees will amount to. There are fees associated with owning a mobile home, condo, and a townhome that accrue monthly and or yearly that can and up…...