New House Decision Essay Example | Topics and Well Written Essays - 1750 words

New House Decision - Essay ExampleThis paper ordain assess the consequences brought about by economics on every major determination we made. Furthermore, this give render the important things to be considered in subvert a fireside with a purpose of helping anyone who is in the quest of deciding to purchase one. Economic Principles The first thing to be accounted for is the probability cost. McConnell & Brue (2005) defined opportunity cost simply as the value of the forgone opportunity to obtain something else when coming up to a decision. probability cost include the possible gains from investing the give tongue to(prenominal) amount of property in a short letter or stock market instead of using it to pay for the down payment (Derrick, 2009). To obtain a house would mean foregoing the chance of earning interest from a possible investment using the same money. It would also mean foregoing the opportunity of going to a postgraduate program or a doctorate one. There were ac tually several things one forgoes in deciding to buy a radical house. Another thing to consider is the callingoffs, from which opportunity cost arises. According to McConnell & Brue (2005), trade off is when you give up one thing to attain more of something else. It is more likely the same with the opportunity cost. The difference is that trade off is the decision itself while opportunity cost concerns the value of the thing given up. In decision making, most of the time, one has to choose an option rationally. In the case, one either has to choose between buying a house or not. If one will opt to purchase a house, his ability to buy another good declines. For example, if one chooses to get the house located near to his or her office, a subdivision of the savings will be lost which could intently be used in buying clothes. So, she will buy fewer clothes, or worse, she will not buy anymore since the same amount of money was used to get the house. Another example would be the same amount used to buy a house could be spent in sending a child to a prestigious school. To others, buying a house would mean sacrificing the education of their children. To arrive at a decision, one has to consider the benefits everyplace the costs. Since buying a house is a life-changing decision, one must think of it carefully. Purchasing a house offers the soon-to-be homeowner long-term financial-related benefits like tax savings. Some people even agreed that its the scoop up investment to make. Quealy & Tse (2010) said that property taxes, the interest part of the mortgage payment, and in some cases, a percentage of the common charges, are tax deductible. Basically, homeowners hindquarters deduct mortgage interest, points or the charges by the mortgage lender, comeliness add interest of up to $100, 000, home improvement loan interest, mortgage tax credit, and real terra firma tax or often called as property taxes. Mortgage interest deduction smoke be the largest among all other deductibles since one can deduct up to $1 million. When one takes a loan for major house improvement, he or she can deduct the interest payment without any limit, provided that the said improvement adds value to the house. To sum it all, it will be a huge tax savings. However, these tax deductibles can only be claimed if deductions are itemized rather than standard deduction. Another incentive a homeowner can get is that the values of real estates, over the years, have appreciated. Along with this is the fact that the value of the house appreciates. The costs to be incurred in purchasing,