A New House Decision

Topics: Economics, Utilitarianism, Marginal cost Pages: 6 (2003 words) Published: September 13, 2010
A New House Decision

I have considered purchasing a new home; I am going to involve all the 10 principles of economics in my decision to see whether it is the right time to buy. The most important part of purchasing a home is the financial area with income, taxes, and annual percentage rates. If you are not prepared to give up something to get something then it is not the right time to buy. I have to remember even though the APR’s may be low and I have my down payment or even if I am using HUD as a first time buyer to eliminate closing cost or no fees at all there may still be one depending on my situation. Purchasing a new home is a big step not only the financial part of if but also the area I chose and the economy at this point and time. I must think ahead to how the economy will be now and later, as well as the housing area I chose. * Will the neighborhood be a good choice for my kids

* Will my house be a smart investment in terms of efficiency and equity There are nine steps when buying a home:
1. Figure out how much you can afford
2. Know your rights
3. Shop for a loan
4. Learn about home buying programs
5. Shop for a home
6. Make an offer
7. Get a home inspection
8. Shop for homeowners insurance
9. Sign papers
I need to determine if a recession will place my decision in purchasing a home the wrong time to buy. A recession could cause job lose and no income to pay my mortgage or even placing me in default to take out a loan on my home. Taking a loan on my home to make ends meet would cause me to pay double for my home and never actually own it. Trade offs are important when purchasing a new home because you have to be willing to give up miscellaneous items to get where u want to be, extra expenses are not a good idea when purchasing a new home. I could consider a yard sale to get rid of old items to replace them with new items for my new house or just to maintain household needs during the closing time. Every penny counts I want to have a separate account that I will not go into for any reason it will be called “Our New Future Account” this is important in order to meet my goals. Trade-offs are simple one must decide if giving up your Friday nights for overtime instead of going out, is the extra money worth it. Of course the more Fridays nights you give up the more money you have for one great Friday out with the family. Since resources are scarce and we cannot have everything that we want, tough choices must be made. The concept of opportunity cost reminds us that every time we make a choice, something else must be given up. Economics provides us with a set of tools that can help us to make better choices. Often times, the best decision is made by weighing the marginal benefits against the marginal costs. (Sorrel) Economic theory is often based upon the philosophy of utilitarianism. The foundation of utilitarian philosophy is "the greatest good for the greatest number." In other words, utilitarian philosophy suggests that decisions be made with the ultimate objective of maximizing societal welfare. Sometimes this choice is easy. For example, when deciding what type of new home I want to purchase, I should purchase the one that I like the best given my tastes, so long as it is within my budget. (Sorrel) Marginal Analysis and Utilitarianism

Marginal Analysis is one of the key tools used in the economic way of thinking, it is useful for: * Cost/Benefits analysis
* Evaluation economic efficiency
* Maximizing Profits/Utility
The Principle of Utilitarianism
* Marginal Analysis is based upon the principle of utilitarianism which argues that the guiding principle to decision making is to achieve the greatest good for the greatest number regardless of distributional issues. * The point is to maximize societal utility or satisfaction. If a project or reallocation of resources results in a net gain to society, then it should be undertaken *...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • A New House Decision Essay
  • A New House Decision: Final Project Essay
  • Xeco 219 Final Project--a New House Decision Essay
  • A New House
  • The New House Economy Essay
  • Buying a New House in Today's Economy Essay
  • Noras Decision in A Doll's House Essay
  • A New House Readiness Essay

Become a StudyMode Member

Sign Up - It's Free