DECISIONS ON PURCHASING NEW HOUSE USING THE TEN PRINICIPLES

Decisions on Purchasing New House Using the Ten Principles

Decisions on Purchasing New House Using the Ten Principles

Purchasing a new home is a major decision that requires a substantial financial outlay where the wrong decision may have long-term financial consequences on the buyer. Some people approach buying a home without much regard for the actual financial impact that homeownership may have. It is imperative that purchasing a home should not be an impulsive decision. People respond to incentives and the cost of something is what you give up; are the principles that plays a major role in my decision of purchasing a new home because anyone who is about to make a financial change in their lives would consider all the pros and cons before the final decision is made. Decision-makers have to consider both the obvious and implicit costs of their actions not focus on their budget and understand the consequences of not being able to meet your mortgage payment. (Maps of World 2009)

Markets are usually a good way to organize economic activity. In that, watching the housing market in the area, in which you want to buy, is very smart. Knowing how the neighborhood is building, researching if the market has peeked or is still on the rise, and watching the areas general economic base of the city, are all issues to watch before buying. This is a one of the principles of economics that can quickly affect the profit of this investment. (Keynes 2005)

The principle of economics which states; People Face Trade-offs, plays a major role in the decision of buying a new home. A person, or persons, buying a new home, needs to evaluate the new costs related to owning this new home. How will they make it work; what costs have to be given up to accommodate for this new costs. The new home buyer will have to evaluate, if they need to face tradeoffs, for this new expenditure, or if they have enough income to purchase, without facing certain tradeoffs. For example, a couple may have to sell their boat, to free up the boat payment, insurance, up-keep, gas, and dock fees to make room for their new mortgage or down payment.

Given monetary items up as sacrifice to purchase a home is a trade off many people make to own their own home; in that, monetary sacrifices are not the only items a home owner needs to make. “The cost of something is what you give up to get it” which can also be non-monetary items. Home owners will also have to give up portions of their free time and activities to acquire and maintain this new home. For example, a new home will need up-keep, cleaning, decorating, and furnishing which all require someone's time. The homeowner will not only need to evaluate, if he or she is able to face enough tradeoffs to purchase, but he or she will need to know if they will ...