Buying a New Home

Topics: Economics, Cost, Marginal cost Pages: 5 (1838 words) Published: February 18, 2011
This paper will address what to consider when buying a new home and what affects like marginal benefit, marginal cost, strength of the economy, domestic economy, and international trade, can have on situations and the conditions when making a decision to purchase a home. The principles of economics can directly relate to the purchase of a house, because you must consider all the possible affects your decision might have and the principles do a great job at helping you be more analytical with your decision and your reasoning to buy. When you consider marginal benefit to a home purchase you will be considering the benefit as a consumer you will have over the housing market of your choice in the area you live. If there are a lot of homes being built, but there is no one buying, your marginal benefit might be best in this market. This does relate to marginal cost because you will need to be aware of what your investment of time and money is or what your putting into the purchase of your new home. Now that the consideration of these key elements has been made noticed, we need to consider domestic economy and international trade. The better your assessment of the economy domestically and internationally, you can prepare and be more secure for the financial outlay of a long-term financial consequence. The principles of economics are a great way to recheck yourself and see how your decisions you’re making will affect your life. The first principle is what people face for trade-offs. You must do a good job at understanding the options that you have available. This alone can protect you from over paying or making a purchase that maybe would save you money if you bought later. Other ways to use this principle is to weigh your options. If your in the market for a new home, then you will really need to know where you want to live and how much your budget is. There might be a home that is right in the location you want to live but the home is priced higher then you imagine you would mortgage for the new home. This is when you face the trade offs of the different homes for sale. You have to weigh out what is going to make you happy later, then just now in the moment. These purchases made in the moment can really be a nightmare down the road. The purchase of a new home is a situation that has a long-term financial commitment. This idea of facing the trade offs is just the first principle of ten, all of them should be consider and analyzed entirely before signing or committing. Each principle can give you an insight that you might not be thinking of and just being able to look at a decision with this much importance from different angles, can really make things a lot clearer. When comparing marginal benefits and the marginal costs associated with purchasing a home, you should start with what your budget is going to be. Now that you have a budget you can start to consider the marginal benefits of your future purchase. The marginal benefit will be determined by what market-structure your looking in. If the home is a new home, in a new development, your going to need to be aware of what the overall interest of the new homes is amongst this areas economy. If the homes have not been pursued by many people and have sat on the market for a while, you could see a good marginal benefit to your purchase. They will need to lower the price of the home from the original home price because they’re not making any sales. This will be your marginal benefit; you get the home for a lower price because the housing market is lacking buyers. The marginal cost will be what you have had to invest in finding the home and getting the finances to buy. If you had to hire anyone to find the house, this cost would be applied to your marginal cost. If the house needed any work done to it, this would be taken out of the price. Many factors can affect marginal cost and the ability to be applied to real world problems. The factors that can affect marginal cost can...
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