A New House Readiness

In: Business and Management

Submitted By GeriC
Words 392
Pages 2
A New House Readiness
Making a decision to buy a new house is an important one; with a new baby on the way it is even more difficult to make the right decision. Living in a studio apartment there is not enough room for everyone, with a new baby on the way it is time to look for a house. With the way things are today it is vital to apply critical thinking before making a final decision. The principles of economics will play a serious part in this decision. A large purchase such as this is a decision that will stay with you for a very long time, so making the best decision possible will have to be carefully done.
The first step is to determine the cost of buying a house; this should include what will be saved by buying vs. how much it will cost to move into a house. Is the cost more or will it be less, it may end up being the same as it is now. This is something that should be figured out first. After doing some research with the locations between the schools and stores, it seems buying a house will be beneficial since traveling would be lessen. Less traveling means saving money on fuel cost as well as wear and tear on the vehicle. Another question to ask is what will be the cost for paying rent over time vs. paying a house note, is there a difference if so what is it. Looking at the cost of buying furniture or appliances also come into factor, how much more it will be furnish a house vs. an apartment.
Principal of economics states making the trade from apartment to house could be beneficial to everyone when the trade lessens the cost by buying. For example, the overhead of buying a house cuts the cost overall. It is best to own a house in the long run since it lessens the cost overall. However, you must also look at how inflation is today, this can make the value of the house go up or down causing the marginal cost to exceed the benefits; if this is the case then…...

Similar Documents

A New House - Readiness

...CheckPoint: A New House – Readiness Principles of Economics XECO/212 Purchasing a first home is the biggest financial decision most people make in their lifetime. There are several factors to consider, and people who make this purchase must thoroughly review the risks and benefits. When my husband and I chose to buy our first home, we considered three economic principles: the decision-making principle of People Face Trade-Offs, the interaction principle of Trade Can Make Everyone Better Off, and the workings of the economy principle of Prices Rise When the Government Prints Too Much Money. We knew we would have to give up going out to eat or to the movies as often. Our mortgage payment is higher than our rent payment was, so we had to cut back on non-essentials; this was a trade-off we were willing to make The interaction and workings of the economy principles created a challenge. Home prices were inflated at that point, because of unethical loan. In this case, trade did make everyone better off, but only on paper. We knew we had to be careful of how we structured our mortgage so we were not in financial danger as the housing market fell. This required a lot of homework to make sure that we could meet these new obligations, and that we did not let our emotions make our decisions. The marginal benefit to us during the home search was that so many homes were available, and the marginal cost was the difference between our......

Words: 303 - Pages: 2

New House Readiness

...Checkpoint: New House - Readiness Of the 10 Principles of Economics that would play a major role in a house buying decision, the most outstanding is The Cost of Something Is What You Give Up to Get It. Setting aside the obvious financial sacrifices that are made to buy a home, people also give up the inanimate that is not always easily identified such as the worry about the decision itself, the worry of making the monthly mortgage payment, the worry of upkeep and maintenance, and the worry of resale of the home should it ever be needed. Making sacrifices and foregoing luxuries such as vacations are the animate part of giving up something to get a home. It accompanies the inanimate of stress and worry. An example of decision making is People Respond to Incentives. Today’s housing market favors the buyer as there are many homes in foreclosure or homes are being sold to avoid foreclosure. This provides an incentive for those who can afford it to buy a home to live in and for those who can afford a second home to rent the home. The rental market is at a premium in many areas as homeowners who are being forced out of the home they tried to own now need to rent. Trade Can Make Everyone Better Off as an example of interaction is easily explained by expounding on the homeowner’s loss of a home and the subsequent need to rent. By having rental properties available by people who are able to own more than one home creates the scenario where people are better off by trading......

Words: 484 - Pages: 2

Checkpoint - a New House: Readiness

...Checkpoint: A New House – Readiness This particular project is very close to me, as I am currently pregnant and am working to purchase a house for our family. When reviewing the ten principles of Economics, there are several that play a major role in my decision to purchase a house. First, we as a family needed to understand that there are tradeoffs that will need to be made in order to budget in a house purchase. Frivolous spending such as eating out and purchasing various technological gadgets will have to be monitored more closely and possibly stopped altogether. Also, any old debt would need to be paid off first to make room in the budget for the new debt of the house payments. In order to understand what items are considered frivolous and what old debt is priority, we will need to develop a short and long term budget that addresses where we are currently and where we want to be, and lays out a course of action to meet those goals. Also in the budget and course of action we would need to identify the incentives of purchasing a house, as well as the consequences that can occur. For example, what are the positives of the neighborhood and schools in the area? If one or both of the income providers lost their jobs or became unable to work, what plan of action would take place? These questions and many others would have to be taken into consideration to understand the pros and cons to purchasing a house....

Words: 259 - Pages: 2

A New House

...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......

Words: 335 - Pages: 2

A New House Readiness

...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. In this essay, I will discuss each principal and the roles they play in the decision to buy a house. Furthermore, I will explain how these principals influence the marginal benefits and marginal costs associated with the decision to purchase a home (Mankiw, 2007). 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 to buy a home (Mankiw, 2007). 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. Principal number two the cost is......

Words: 406 - Pages: 2

Xeco 212 Week 1 Checkpoint a New House-Readiness

...XECO 212 Week 1 CheckPoint A New House-Readiness To Buy This material Click below link http://www.uoptutors.com/XECO-212/ECO-212-Week-1-CheckPoint-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. This CheckPoint is designed to have you 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. Resource: Ch. 1 in Principles of Economics Consider the 10 Principles of Economics as outlined in Ch. 1 of Principles of Economics. Assume for this CheckPoint that purchasing a new home would be a major decision requiring a substantial financial outlay where the wrong decision would have long-term financial consequences. Submit a 250- to 300-word response addressing the following points: Which of the 10 principles do you think plays a major role in your decision? Provide an example for each about decision making, interaction, and the workings of the economy. Explain how that would influence the marginal benefits and marginal costs associated with the decision to purchase a house with APA Format For more materials visit: http://www...

Words: 254 - Pages: 2

New Readiness

...Latonya Rice Jan. 6, 2012 XECO/212 Week One Checkpoint; New House Readiness Deciding to buy a house, in my opinion, would be a lifelong goal that I consider an extremely serious investment. My studio apartment would not be large enough for the newest member arriving to my family; it would only suit the time being. Therefore, I have decided to move to larger accommodations. I have examined the factors that come into play with making such a large and weighty purchase from the perspective of an economist. The principles that I think would play a major role in my decision are: Principles 1 - 10. Principle 1: I would face tradeoffs in purchasing a home, a thorough look at my income and expenses will be a priority (i. e.”what if” scenarios). Principle 2: What can I give up to get my house (i.e. Sacrifices, what is necessary and what’s not). Principle 3: What are the benefits and opportunities of a house over an apartment? Principle 4: What are the incentives for me owning a house? Principle 5: Is this a beneficial trade that can make it better for everyone? Principle 6: Would it be a more beneficial organization owning a house (i. e. being closer to work, schools, etc.)? Principle 7: Would property rights enable more promotion for efficiency and to promote equity? Principle 8: Would this enable a higher standard of living or lower (with the trade- offs in my budget)? Principle 9: Inflation, the growth in the quantity of money (i.e. Would the payments...

Words: 308 - Pages: 2

Checkpoint: New House - Readiness

...Week 1 Checkpoint When buying a new house you have to take into context all of the principles. You have to ask yourself how the market is for a house, how have living standards changed, is the government improving the market, and etc. Everything plays a factor when buying a house. The one principle that I think is very important is number six. I think one should know the market value for a buying a house and how the cost of living works. Most people tend to think buying a house can be easy, and that’s not true. A lot goes into planning for buying a house. In the current economy that we are in, the cost of living is high and finding an affordable house is very hard. The government isn’t exactly making the market any better either. With the unemployment rate the way it is, it’s hard enough trying to find a job let alone buying a house. Without a steady source of income, one can find buying a house a very hard task to do. Next you have to think about if you’re really ready to give up something else to gain the house that you want. Most people don’t always think rationally and that’s bad. In most cases like this with a house a person might set their self back into debt by buying a house. You may be taking money from other places just to satisfy this one need, when you have other pressing matters. It’s like you giving up your car payments to save for the house, essentially your give up on your car to satisfy another need. Most people aren’t ready to do that. Then again a......

Words: 627 - Pages: 3

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 things such as vacations, movies, special occasions,......

Words: 498 - Pages: 2

New House - Readiness

...responsibility is worth giving up something of equal value. This value could be placed on the care free lifestyle of apartment living that costs substantially less than home ownership. A person needs to look at what they would have to give up in order to be a home owner. Rational people must determine if owning a home will fulfill an objective. Pregnancy changes one’s perspective as does marriage. If the new objective is to provide space for a child and safe community, than owning a home would justify the objectives set. Owning a home would involve establishing other objectives like finding the funds to support it. This could mean finding a better paying job. Owning a home is a large incentive for most people, it provides security and pride that an apartment cannot provide. Purchasing a home will be a trade up or a tradeoff depending on how it’s looked at. Purchasing a home is a trade up because it provides ownership of personal space. Sometimes buying the most luxurious and expensive home is not the right answer, one has to evaluate what they can afford versus what they like the most. A new car might look nice, but does not mean that you can afford it. Before buying a home limits need to be set based on a budget. Now is a good time to buy a home because interest rates are low, and home prices are low. Now would be a very good time to make a wise investment, many builders offer incentives to home buyers. Furthermore, buying a home could improve one’s standard of living......

Words: 424 - Pages: 2

A New House Readiness

...A New House Readiness Susan Whitebird XECO/ 212 April 5, 2012 Linda Beach The decision to buy a house or not is one of the biggest life changing decisions you can make. If there is more than one person involved in this decision to purchase a house they will experience the first principle of economics, people face trade-offs. What means more the price of the house or the location of it? I think that the location means more than the price, but you have to keep the price in mind when you are looking. How far are they willing to travel to work to get the home they want? When my husband and I bought our house I was willing to drive 50 miles a day round trip to and from work to get the home my husband and I fell in love with. The second principle of economics is also important when it comes to purchasing a home. The cost of something is what you give up to get it. We were paying $450.00 a month in rent and now we are paying $610.00 a month for our house payment. We had to pay off some of our other loans and we have to watch what we spend our money on to make up the difference of the rent and what our house payment is, but it is worth it. Most people will consider the fourth principle of economics when they buy their home. The fourth principle is people respond to incentives. When you own your own home it will provide you with a tax break when you file your taxes. We bought our house when there was a tax incentive of a 10% of the purchase price. This tax......

Words: 306 - Pages: 2

A New House – Readiness

...A rational person thinks at the margin. The marginal benefits from moving to a house are good ones. We will have more rooms. We will live closer to local schools and services. With the market being low at the moment we could buy a house at a lower cost with lower percentage rates keeping our over- all cost down. With buying a home we can get a discount or even refund from the interest on the house. Trade can make everyone better off. I am going to trade paying rent, which is someone else’s mortgage to buy a home and pay my own mortgage. I am saving in the long run because I am not paying someone else a profit to rent their apartment. I am making an investment by purchasing my own home and can benefit from it later. Society faces a short run trade- off between inflation and unemployment. I do worry that with the economic situation in the U.S. today could cause me to have to pay more for my home in the long run, I do believe that it is a good investment. I believe that my job is not in danger and I will not be forced to be unemployed anytime soon. I think that the good of buying a house our weighs the bad about it. From an investment and financial point of view, buying a home would be better for us. Buying a home while only a small step in the recovery of the economy, it is a positive one in the way that it could boost it a little....

Words: 269 - Pages: 2

New House - Readiness

...New House - Readiness Of the 10 principles of economics; I would concentrate on two particular principles throughout my decision process of buying a new home. Principle one: people face trade-offs. The trade-off would be the cost difference between a home and a rental. Assuming the payment for a studio apartment is substantially reduced compared to a house payment. In addition to an increased house payment there are additional costs to consider as well for instance; electric, gas, water, property tax and homeowners insurance, things that could be included in the cost of a residence that is rented. Principle two: the cost of something is what you give up to get it. I have to consider what I would have to give up with purchasing a home contrasted to my rental. In a rental, the property manager is more likely to be held responsible for any issues within the apartment, whereas an owner of a home is the responsible party for these issues. I would be giving up being able to rely on someone else to take care of the issues within the apartment because the cost of these issues would become my own responsibility. In additional to financially costing me more money it could also potentially assume my attention as well. The marginal cost of the decision to buy a home now could possibly put a damper on me financially, verses buying in the future and having the ability to save and not be financially put in the hole. However, the marginal benefits would be a spacious living area for my......

Words: 296 - Pages: 2

A New House- Readiness

...A New House-Readiness Alesia Rushin XECO212 05/18/2012 Thomas Westover A New House-Readiness The apartment that I live in is too small for my baby and me. However many people say this is the best time to buy a house because the interest rates and prices are low. The rent on the apartment that I have is constant going up and up. I believe that in the years to come rental rate will continue to go up. In looking for a house if I can lock into a low fix rate my mortgage will stay the same? In addition, because of the economy banks and owner are passionate about selling their homes therefore this would be a good time for me to purchase a home. The first principle that I think plays a major role in my decision is number two. “The cost of something is what you give up to get it. I have to look at the fact of the alternative if I do not move I will have to stay in this small apartment which is far from school and local services. Therefore, I give up the negative in the apartment to get the thing that I need especially a bigger place. The next principle that I believe is major in my decision process is number three. Rational people think at the margin it may be wise to make small adjustment first before I purchase a house. The margin benefit that I may consider is the total benefit if I was to purchase a house. The marginal cost would be the total money that I may have to pay in the house. For instance, maintenance on the house as well as the mortgage will be additional......

Words: 350 - Pages: 2

New House Readiness

...journal entry of my voyage to America and the struggles that came with the journey. My Journey to the United States was a dream never thought of, it was a tremendous sacrifice for my family. We traveled the Atlantic from Ireland to New England to flee the famine “to a better life as from almost certain death” (Richard T. Schaefer, 2012, pg.126). We were forced to migrate with what little we had; a fungus wiped out the potato crop of Ireland. “Potatoes are particularly central to our lives; it is almost as if starvation had begun (Richard T. Schaefer, 2012, pg.126). Death has been particularly higher among the poor in the more agricultural area. We brought what little we could to new land more than 2 million of us fled to England and some continued to the United States. We left England on a ship so crowded, with conditions so terrible. By the time we arrived to the United States about 3.2 Million people had fled Ireland. We arrived at the New York port, most of us settled in New York, Pennsylvania, Massachusetts, Illinois, Ohio, and New Jersey. In order to pay for the voyage to the United States my parents became indentured servants for cost of the voyage, followed by 4 years of servitude. As soon as we left the Port of New York we settled at the Port arrival section as poor immigrants with no means of moving on. We were often found begging every street. Later we moved to a neighborhood called a “shanty town”. At the “Shanty towns” we stayed with my......

Words: 771 - Pages: 4