Home Ownership and the Decision-Making Process

Topics: Economics, Marginal cost, Marginal concepts Pages: 1 (351 words) Published: April 5, 2013
Week One Check Point
Purchasing a New Home
Tina Chapin Beshears
January 11, 2013
Gregg Burnett

Purchasing a New Home:
This is going to be a difficult topic. As I tend to be a satisfied renter and purchasing a home might have been a dream of mine but life and circumstances has changed my opinion of that dream. I will however do my best in writing this. Which of the 10 principles do you think plays a major role in your decision? The first 4 principles are based on the decision making process. Those principles were People face trade offs, The cost of something is what you give up to get, Rational people think at the margin, People respond to incentives. This is from Mankiw (2007). When deciding to purchase a home. There are many things to consider. So the first principle used is rational people think at the margin. I say this because this principle basically covers all 4 in one. As people will do the best they can to achieve their objectives. When purchasing a home this principle hits home. Marginal changes are the small adjustments one has to make to set plan into action. Which first would be knowing the amount you are willing to spend or can afford to spend then figuring the down payment for this and knowing the monthly cost of said purchase as most will need to find a lender willing to loan them this money. It is like being sure all your eggs are in the basket . As for the marginal costs and the marginal benefits when buying a home they both break even in a sense. Knowing it is going to cost to get. You have the pro’s that are being able to more or less do whatever you choose to make this your home such as remodeling . You are in charge of your own wishes in a sense as long as you are making the payments. You do not have anyone telling whether you can do this or that. The marginal cost is worth that freedom to most.
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