Buying a new home can either be an exciting experience in someones life, or can be a major heache with serious consequences. I was fortunate enough to get a house the a VA loan, and the process was somewhat more simple, because I did not have to do the majority of tasks by myself. I advise all of my friends and family, or whomever wants to purchase a home to consider many factors before making that decsions. Principles of economics plays a vital role in the decision making process when wanting to purchase a home. At the time, when I bought my house I didn’t know this but now since I am more knowledgeable on the economical principles, I realized I was applying all these steps unintentionally. Overall buying my home, was a major decision, and I know realize the consequences if not considering factors such as the economy, marginal cost and benfits, or even the right timeing of the supply and demand.
Principles of Economics
The principles of economics are what consumers use on a regular basis when dealing with trade, cost, products and services. This relates to my purchase decision when I bought my house because every principle neeed to be considered. Here is how for example considering people face trade offs. This principle is based on giving up something else to get one thing. In this particular case, I sold one of my vehicles to help me make the down payment on my home. This to me was a sacrifice.
Another principle that applied to me was the cost of something is what you give up to get it. I felt that buy selling my vehicle was a daring sacrifice, but I really wanted a home so, I sold my vehicle so my family and I could have more space and better living conditions. Then last but not least is the principle of people responding to incentives. Their where a lot of incentives in buying a home. For example I was eligble for the 1st time homebuyers credit, positive impact to credit report, and a more spacious home. According to the principles of ecomics incentives are what attract consumers, it increases buying abilty, because as consumers pay out getting a incentive in return can be very beneficial. In essence all principles played a role, but out of the ten these where the ones I felt related more with my decision in purchasing a home for the first time. Careful consideration, considering the economy as a hold and making sure that it was a safe housing market at that particular time.
Marginal benefits and costs
In purchasing something as essential as a home, marginal cost and benefits must be considered. In my purchasing my home, for the first time marginal cost is what I looked into before making any over the top decisions. According to Investopedia (2011) website many cosumers are to consider marginal cost before making any major purchasing decisions. This can be very beneficial in making the right decision. Many consumers before purchasing any major item such as a vehicle, land, properties marginal cost are always considered first. In...