...XECO212 2-11-14 New Home Risk and Benefits There are many risks associated with purchasing a new home. Understanding what the risks and benefits that are associated with purchasing a new home will help a potential buyer make the right decision. I recently purchased my first home last year, and found myself weighing in on all the benefits and risks associated with my first home purchase. A couple of more recent fiscal policies that the government implemented recently were the first time home buyer credit and a new low interest rate of 3.1% for qualifying buyers towards a first home purchase. These two policies that were implemented by the government were meant to change the demand for homes in the economy and target new home buyers to purchase their first new home. This in return would jump start a boost in the economy by theory. These two policies where what made my decide to purchase a new home because they were and are great incentives. The first time home buyer tax break/ credit has since expired, however all time low mortgage rates are enticing buyers to purchase new homes still. The government also backing FHA loans allows first time home buyers to be approved for their first home loan in a tough economy. If the economy takes off, more houses will be purchased, the values of homes will rise, and eventually interest rates will rise once the government feels that spending is at a high point in order to slow the economy from over growth. I feel that the risk of buying in a...
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...A New House Mark Anderson XECO/212 April 5, 2013 Anna Gonzalez A New House One government body that influences national fiscal policies is the Federal Reserve. The Federal Reserve is the central banking system of The United States. The Federal Reserve influences the interest rates on home loans through the buying and selling of bonds and securities. If the Federal Reserve purchases a large amount of bonds and securities interest rates on home loans will lower; causing a rise in home sales. A recent national fiscal policy that effected mortgage rates, housing starts and housing prices is the bond buying stimulus plan that the Federal Reserve implemented in 2008. The bond buying stimulus plan is a plan where the Federal Reserve purchases bonds in an effort to keep long-term rates down. The bond buying plan was started in an effort to help spur investment and consumption in the economy. There was a drop in interest rates shortly after the implantation of the Federal Reserves new policy. A rise in housing starts and home sales can be attributed directly to the lowering of interest rates. When it comes to weighing the risks and benefits of purchasing a home I would recommend a person find out as much information as they could on their own before consulting a professional. They should look at interest rates and determine if they are trending up or down. Look to see if the Federal Reserve is buying or selling bonds and securities in order to help...
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...A New House - Risks and Benefits XCEO-212 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...
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...policies are created through the regulation of the amount of currency that is in circulation through the sale or purchase of T-Bills. If the Federal Reserve Banks purchase T-Bills more currency is then released into circulation which will lower interest rates. If the Federal Reserve Banks sell T-Bills currency is taken out of circulation which in turn raises interest rates. Private banks use these base interest rates to then determine the amount of interest to charge its customers when they wish to borrow money in the form of personal loans, construction loans, building loans, and mortgages. If interest rates are high, mortgage rates will also be higher. The higher the rates the less likely consumers will apply for a mortgage to purchase a new home. The Federal Reserve also purchases mortgage-backed securities to provide support to the mortgage and housing markets and to improve conditions in financial markets. These purchases allow entities such as Freddie Mac and Fannie Mae to provide more mortgages to consumers (Burek, 2010). The U.S. Department of Treasury controls the value of the dollar which impacts the economy through inflation. The Treasury can affect the housing market through the sale of Treasury Bonds, T-Bills and Notes. The interest paid on these affect the fixed-interest mortgage rates. The lower the yield, the interest paid on the notes, the lower the fixed-interest mortgage rates (Amadeo 2010). The lower the rates the more willing consumers will be to make larger...
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...The current housing market is currently seeing the lowest interest rates for mortgages in recent history. With so many houses in foreclosures and even more neighborhoods and housing markets suffering from the current economic crisis the likelihood of people buying homes has decreased over the past few years. With federal agencies such as the Housing and Urban Development (HUD), The Federal Reserve System, and FEMA, helping to determine housing costs, developmental costs, annual living expenses, and other variables play specific parts in determining market value for homes as well as interest rates on mortgages. Prime lending rates are a huge factor. It will determine whether or not a lender may borrow money from the Federal Reserve to finance the mortgages that people are applying for. These loans also include construction loans for new homes, which will affect new home sales, prices, and the market. Higher interest rates will raise wholesale home prices because of the cost of borrowing it however when interest rates are too high people can no longer borrow the money making the prices begin their decline. The government bodies that influence the national fiscal policies that potentially affect the housing market are the Federal Reserve. This body decides the rise and fall of interest rates. The risks in buying a home right now are that if the housing markets continue to decline your homes value may end up being less than what you still owe with your mortgage company. The benefits...
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...A New House Risks and Benefits * In general terms, national fiscal policy refers to the way in which a government’s spending and taxation policies are able to influence the economy. Governments tend to use fiscal policy to control aggregate demand, price stability, economic growth and employment. Fiscal policy is a contrast to monetary policy, the alternative macroeconomic policy whereby attempts are made to stabilize the economy by controlling the money supply and interest rates The Federal Reserve System is the central banking system of the United States. It was created in 1913 with the enactment of the Federal Reserve Act, and was largely a response to a series of financial panics, particularly a severe panic in 1907. HUD, That is the Housing and Urban Development, FHA, FEMA, DHS, and a bunch of others all affect the housing market. Deductability of mortgage interest and real estate taxes. Anything that the the government does that affects tax receipts/expenditures (aka fiscal policy) changes demand for housing. When the demand for housing changes mortgage rates, prices, etc. all change accordingly. A government could provide tax concessions to encourage builders to develop on greenfield sites rather then brownfield sites, thus increasing the overall supply of housing. This in turn should theoretically have the result of driving housing prices down. From the perspective of homeowners, certain government taxation will have a direct impact on housing prices. Placing a...
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...A New House Readiness Purchasing a home can be a big step in anyone’s life; I can have its advantages and its disadvantages. There are many options an individual would need to think about when investing in a home. The principles that would help would help with decision- making would be Face Trade-offs (Mankiw, 2007) The Cos of Something is What You Give Up to Get it (Make, 2007) Decision-making when buying a home the principle People Face Trade-offs will help with the final decision. With making the decision this means that individual will be trading off one goal against another goal. (Mankiw, 2007) In the process of buying or investing in a new home as a first time buyer will have to sacrifice a lot, such as going out of town to visit family and friends or giving up special activities. Furthermore they will have to spend quite a bit of money when purchasing a home. This is the only way they will be able to save money it to sacrifice other things they like. There are different things an individual purchasing will need the money for such as taxes and mortgage and home owner’s insurance. Also the buyer would have to put in time and effort when searching for the home, not to mention the lender. If that person(s) understand the value of trade-offs and understand the cost that is available they will be able to make some high-quality decision. Cost also plays a big part in purchasing and or shopping for a home. Marginal decision making can help explain some other puzzling economic...
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...Proj 595 - Risk Paper 1 Pm595 Risk Paper: Buying a new house Project Risk Management Professor: James Reckon Authored: Michael Arcoli December 18, 2015 TITLE: Purchasing A HOUSE TABLE OF CONTENTS INTRODUCTION RISKS IDENTIFICATION RISKS RANKING MATRIX RISKS MONITORING CONCLUSION REFERENCES * INTRODUCTION Whenever considering a major purchase in life one must carefully consider the risks associated with making these purchase decisions. These decisions should be treated as projects in such a way that proper planning, analysis, risk assessment and contingency should all be aspects of the purchase process whether formal or informal. In this paper, I will discuss about a project that many people are familiar to: buying a new house. Few years ago, I moved to a new area and was trying to decide whether or not to purchase a new house, and if so, where should I buy it. I also considered if I should buy a preexisting new house or hire a builder for a new house. Every option had its own set of potential risks. If I continued to rent, was this really just throwing away money. If I purchased a house, could I afford it and was I buying the best house for me and my family? I approached it like any other project, with interviewing people, note collecting, collating, and interpreting the data. After reviewing my expenses and income and examining the tax advantages, I decided to buy a house but knowing that several risks may accompany my decisions, these...
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...Risk Paper 1 Pm595 Risk Paper: Buying a new house Project Risk Management Professor: James Reckon By Magued Farag May 24, 2014 TITLE: BUYING A NEW HOUSE TABLE OF CONTENTS INTRODUCTION RISKS IDENTIFICATION RISKS RANKING MATRIX RISKS MONITORING CONCLUSION REFERENCES * INTRODUCTION Whenever considering a major purchase in life one must carefully consider the risks associated with making these purchase decisions. These decisions should be treated as projects in such a way that proper planning, analysis, risk assessment and contingency should all be aspects of the purchase process whether formal or informal. In this paper, I will discuss about a project that many people are familiar to: buying a new house. Few years ago, I moved to a new area and was trying to decide whether or not to purchase a new house, and if so, where should I buy it. I also considered if I should buy a preexisting new house or hire a builder for a new house. Every option had its own set of potential risks. If I continued to rent, was this really just throwing away money. If I purchased a house, could I afford it and was I buying the best house for me and my family? I approached it like any other project, with interviewing people, note collecting, collating, and interpreting the data. After reviewing my expenses and income and examining the tax advantages, I decided to buy a house but knowing that several risks may accompany my decisions, these risks rank from high probability...
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...Running head: PURCHASING A HOUSE RISK PAPER Purchasing a House Risk Paper Keller Graduate School of Management Project Risk Management PROJ 595 Dr. Susan Orr August 04, 2013 Purchasing a House Risk Paper INTRODUCTION The many advantages to owning a home have been well publicized. However, the above satistics make it clear that owning a home is not without risk. To form a complete picture, you, the prospective buyer, need to consider the potential risks and disadvantages of home ownership as well. Understanding these disadvantages beforehand will give you a better chance of minimizing their impact and avoiding the fate suffered by these homeowners. RISKS IDENTIFICATION There are many risks in buying a new house such as: • The opportunity cost of investing in an alternative investment is very high because the entire cash and future income stream is tied up into one asset a home, which may or may not appreciate. • The house is an undiversified investment, so if the market tanks as it has, game over. • Knowing that we do not own our home, the bank does. • A lot of cost connected to home ownership, such as repairs and insurance and fees and potential hazards I have not considered. • If I lose my job, game over, this will put a lot of stress on me. • There is a chance that your new home will lose value. Luckily, in general, the longer you own your home, the less likely a loss becomes. Loss of value is typically a short-term problem, possibly due to the local...
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...Risk Paper 1 Project Risk Management 595 11/17/13 Buying our First Home In this paper, I will discuss about a project that many people are familiar to: buying a new house. I moved to Columbus in 2001 to go to college, after renting for nearly a decade and living with roommates, I found a woman that I wanted to spend the rest of my life with. I had a good job and a good woman the only thing that was missing was somewhere to call home. We moved to a new area and we were trying to decide whether or not to purchase a new house, and if so, where should I buy it. I also considered if I should buy a preexisting new house or hire a builder for a new house. Every option had its own set of potential risks. If we continued to rent, we were really just throwing away money. If we purchased a house, could we afford it and were we buying the best house for me and my family? I approached it like any other project, with interviewing people, note collecting, collating, and interpreting the data. After reviewing my expenses and income and examining the tax advantages, I decided to buy a house but knowing that several risks may accompany my decisions, these risks rank from high probability – high risk to low probability – negligible risk. There are many risks in buying a new house such as: The opportunity cost of investing in an alternative investment is very high because of all the cash and future income stream is tied up into one asset a home, which may or may not appreciate. The house...
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...Table of Contents Risk Management Plan for Buying a House and Moving into the House 1 Executive Summary 3 Introduction 4 Project Description 5 Project Sizing 6 Stakeholder Analysis 8 Risk Breakdown Structure 9 Probability – Impact Matrix 10 Risk Register 13 Risk Reviews and Reporting 15 Conclusions and Recommendations 15 References 17 List of Figures Figure 1 – Buying a House 3 Figure 2 – Buying a House and Moving into the House Project – Project Sizing Tool 7 Figure 3 – Buying a House and Moving into the House Project – Stakeholder Analysis 9 Figure 4 – Buying a House and Moving into the House Project – Risk Breakdown Structure….. 10 Figure 5 – Buying a House and Moving into the House Project – Probability and Impact Matrix 11 Figure 6 – Buying a House and Moving into the House Project – Risk Prioritization 12 Figure 7 – Buying a House and Moving into the House Project – Probability and Impact Scales. 12 Figure 8 – Buying a House and Moving into the House Project – Probability and Impact Scoring Scheme 12 Figure 9 – Buying a House and Moving into the House Project – Risk Register 13 RISK MANAGEMENT PLAN FOR BUYING A HOUSE AND MOVING INTO THE HOUSE PROJECT Prepared by: Angel Wallace, Home Buyer, Buying a House and Moving into the House Project Approved by: Ramon Vargas, Home Buyer, Spouse Version: 1 Date: October 21, 2012 Figure 1 – Buying a House Note: From the website: http://www.beazer.com/new-homes-for-sale/Dallas-TX-Willow-Ridge-available_home-Baxter_50'-22932...
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...of whether to create a new product in-house or through a partnership in order to meet the needs of their customers. They also have to consider in their decision the issues with their current staff lacking some of the skill needed to produce this new product. Describe the Situation Issue and Opportunity Identification TeraTech is faced with the dilemma of which direction the company should move forward. With customer satisfaction becoming an issue and increased competition TT needs to move fast on deciding to launch a new product created in-house or to partner with a company already producing such a product. TT is being challenged by this due to company growth has begun to slow down. Christine DeFalco has addressed the issue of a marketing mix and whether production in-house or thru a partnership as to how this product be priced, promoted and placed to fit within the direction TeraTech is wanting to move forward. Stakeholder Perspectives/Ethical Dilemmas If going with the direction of TeraTech expanding its product line there are ethical dilemmas that stakeholders are being challenged. One dilemma is Christine DeFalco hopes of expanding TT product line may become a challenge with Chris Riggs, VP of human resource announcing a hiring freeze. Marketing research to collect and analyze information to justify what actions to take can be a strong argument to convince Chris to support hiring additional staff to meet the demands producing a new product. The alternative...
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...2.2.2 Project Manager 4 2.2.3 Requirements Manager (Project Team Member) 4 2.2.4 Measurement Analyst (Project Team Member) 4 2.2.5 Quality Assurance Manager (Project Team Member) 4 2.2.6 Configuration Manager (Project Team Member) 4 2.2.7 Risk Manager (Project Team Member) 4 2.2.8 Team Leaders (Project Team Member) 4 2.2.9 Project Training Needs 4 3. Project Management Activities 4 3.1 Integrated Project Management 4 3.1.1 Use of DHI’s Defined Processes 4 3.1.2 Coordinate and Collaborate with Relevant Stakeholders 4 3.2 Project Planning 4 3.2.1 Establish Estimates 4 3.2.1.1 Material Costs 4 3.2.2 Develop a Plan 4 3.2.3 Obtain Commitment to the Plan 4 3.2.4 Communicate the Plan 4 3.2.5 Risk Management Planning 4 3.2.6 Quality Assurance Planning 4 3.2.7 Quality Assurance Audit Schedule 4 3.2.8 Project Management Tools 4 3.3 Project Monitoring and Control 4 3.3.1 Monitor the Project against the Plan 4 3.3.2 Cost Control 4 3.3.3 Manage Corrective Action to Closure 4 4. Assess the Processes and Work Products 4 5. Verification 4 6. Documentation 4 List of Figures Figure 21 Dream House Project Organizational Structure Chart 3 Figure 31 Project Management Life-Cycle Model 4 List of Tables Table 21 Dream House Project External Roles 3 Table...
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...PROJ 420/Semester and Session Project Topic Proposal and Outline WEEK 1 Assignment Risk Management Plan for the (Brew House) Project Prepared By: Approved By: Project Description and Objectives: This project will produce the full completion of a functioning Brew House which will serve the public local beers brewed from within the community. This project will be the creation of a new company; therefore, the goals and objectives are directly related to the project. The objective this project will meet is the ability to produce potential profit. This Brew House will not only thrive within the local community and offer a place to test the market of local brews under one roof, but will also offer a way for the owners to turn a valuable profit. Starting a new business in a new market is always risky, the main risk would be that this Brew House makes no or little profit based off of its investment. This project is high-level priority. Objectives of the Risk Process: The main objectives of the risk process are managing the construction budget, the construction timeline, contracting local breweries, and finding good quality managers. The risk tolerable vary from one objective to another; however, all objectives need to be completed within the time and budget given for overall success. (Instructor note: This is the opening step in your Course Project. Keep in mind that the project you choose will be what you will be working on throughout the course. The more extensive...
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