...Week 5 – A New House – Risks & Benefits Kathleen Butcher XECO/212 – Principles of Economics 02/9/13 Tonya Wilhelm When purchasing a new home there are many things to consider. Reviewing the risks and benefits when thinking about making a life changing purchase of buying a home can help you determine when is the right time for you. There are multiple government departments that can impact the national fiscal policies but the one that has the potential for the biggest impact is the Federal Reserve. The Federal Reserve is the one that decides if the interest rates increase or decrease based on what the market is doing. There are multiple policies that can have an influence on the different parts to consider in buying a home, such as, mortgage rates, housing starts, and housing prices. The first thing to look at as a consumer is the lending rates. This rate helps lenders decide if they will borrow money from the Federal Reserve to have money to put into mortgages and housing starts. The higher the interest rates, the higher the cost of buying a home will be. If the interest rates get to be too high, the housing market will become stagnant and cause issues in the economy. The suggestion that I would give to someone looking at buying a home would be to analyze the risks and benefits of purchasing a home. There are so many considerations to take into account for first time buyers and people looking to refinance. When purchasing a home there are people who...
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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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...During the 1950’s The American Dream had changed, WWII veterans returning home realized this new change and bought into the fantasy. The U.S. government introduced the GI Bill in 1944 that gave financial assistance to war veterans for education, business loans, and of a new home. This new life soldiers sought after was complete with a wife, three children, a dog, and a cookie cutter home in suburbia. As many American civilians watched television programs that painted this pretty picture, and seeing veterans achieve this life style, it wasn’t long before the country began to chase the fantasy of owing a home and living the America Dream. Limited knowledge about buying a home was available to the consumer, as this was a fresh new concept. Since this concept of the American Dream was introduced, every generation seeks to achieve it year after year. In the process much information and statistics have been obtained; and the risks and rewards have since changed. There are huge risks involved in buying a home, and multiple pros and cons that should be thought out before buying. One should strongly consider the 10 principles of economics such as “A Trade-Off”, “The Cost of Something Is What You Give Up to Get It”, and “Rational People Think at the Margin” to name a few. A buyer should compare the marginal benefits, and the marginal costs; and be aware of the strength of the economy. As I consider these factors I also look at other markets that may affect my decision, and compare different...
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...Finance Board is responsible for setting mortgage rates for homes and property and regulates banks that supply money to local lenders, ensuring that they are lending money to suitable person’s at appropriate rates. Housing and Urban Development (HUD) is responsible for working with the community to ensure more people to become home owners, and also work to provide low-income families the opportunity to obtain homes. The Federal Housing 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...
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...approximately 70-80 million dogs have homes. Despite the numbers sounding high, for every ten dogs born, only one of them will find a permanent home. Shelters are often overflowing with animals every year, mostly due to finding homeless animals on the streets. In America, of the 3.9 million dogs that enter shelters each year, 1.2 million of those dogs are euthanized due to lack of space, resources, and people willing to adopt. Each year 28 percent of the dogs in homes are obtained through purchase from a breeder. The fact that breeding is used as a business adds to the overpopulation of dogs, a problem which could be easily reduced if breeders found a better business. The benefits to adopting a dog will outweigh those of a buying one from a breeder in all aspects from prices to a sense of fulfillment....
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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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...A New House-Risks and Benefits The Finance Housing Board is one of the government bodies that can influence national fiscal policy and affect the housing market. It is responsible for setting mortgage rates and regulates banks that supply money to local lenders, to ensure they are lending money to suitable people at appropriate rates. Another body of the government which can influence national fiscal policy is the Federal Housing Administration (FHA). The Federal Housing Administration strives to provide better housing standards and conditions; they are responsible for insuring bank loans for home buying or the building of a new home. When federal banks make decisions regarding fiscal policies to increase or decrease interest rates, this affects the mortgage rates, housing starts and housing prices. A lower rate creates more activity, more people can now afford to buy a home, and in turn this stimulates the housing market. When there is more opportunity to buy, this creates more demand for homes, therefore more home begin to sell. On the flip side of this when rates are increased, less people can afford to buy, homes do not sell as fast, and there is less interest to purchase a home. Based on these recommendations, there is risk in any type of investment. However, purchasing a home over the long run is usually a better risk than many other investments such as stocks, or IRA’s. The major benefit of a home purchase is the tax deduction on mortgage interest, in addition...
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...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 market...
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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- 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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...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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...A New House - Decision XECO/212 May 15, 2011 Don MacLean Axia College of University of Phoenix Much thought should be given and taken into account on whether to purchase a home. The decision to buy a home is a very big and important step that should be entered into very carefully. A new home purchase is one of the most significant decisions people will make in their lifetime. There are many factors that can affect one’s overall decision to buy a home. When people consider making the jump from renting to owning, sometimes they mistakenly consider only the cost of the rent versus the cost of the mortgage payment. Unfortunately, some people make the decision to buy a home without considering these factors. In order to determine how much housing I can afford, I must factor in many things such as location suitable for raising a child, savings, other debts, personal preference, and income. Therefore, I have decided to purchase a home and will apply some of the ten principles of economics to ensure I’m making the right decisions along the way. Utilizing some of the ten principles of economics such as people face trade-offs, the cost of something is what you give up to get it, and people respond to incentives will help shape my decision so the home buying experience can be a thought out process altogether. Other essential factors that must be included are the marginal benefits and marginal costs associated with buying a home. Purchasing...
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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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...Buying or Renting: Which is better for you? Your Name Com/156 Current Date Your Instructor Buying or Renting: Which is better for you? Introduction Many times we are faced with the challenge of choosing between buying a home and renting one. There are various advantages and disadvantages related to each of these options that an individual has. It is the dream of each individual to own a home in a good environment which is secure and peaceful. There are two options that one can choose from when considering a home. One can either rent or buy. It is important to carry out a thorough investigation on each of the options and make an informed decision. The decision of buying or renting any asset is crucial and should be critically analyzed. Therefore, it is important for one to take into account the benefits and costs involved in each option before deciding on the one to take. One might choose to use a buy vs rent comparison tool such as the mortgage calculator that can be provided by a lender or real estate broker. The Rent versus Buy Comparator allows the user to compare their estimated financial position after 7 years of renting with their estimated financial position after 7 years of home loan repayments (Realtor.com, n.d.). This tool will allow the buyer or renter to compare the possible financial cost and assists in making the decision whether to buy or rent. Moreover, most finance calculators will take into consideration the rent, rent insurance, expect...
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...A New House Decision James Wilkerson XECO/212 Prof. Paul March 11, 2012 A New House Decision Buying a house is a decision that can have major consequences for someone if they buy at the wrong time. Purchasing a home is one of the biggest financial decisions that any one person can make. The strength of the economy can give you good information as to when to buy and when not to buy. Timing can be very beneficial for a buyer and understanding how to make the decision when to buy can have long term financial consequences for the buyer. In this case the buyer is me. When making a decision to buy a new house I will look at the principles people face tradeoffs, the price of something is what you give up to get it, rational people think at the margin, and people respond to incentives. While I want to buy a new house there are several different areas that I will look at before making the purchase. How much each home costs plays a role in my decision. It is important for me to live within my means of money so making the right choice will benefit me the most. Looking at new homes there may be two that are different in space, number of bedrooms, and price. I personally am looking for the most amount of space for the price that I can afford. I currently own the house that I have now and in order for me to buy it will have to be beneficial for me to give up what I have at the moment. I face tradeoffs of buying a new house verses...
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