Xeco 212 Checkpoint: a New House – Readiness

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Checkpoint: A New House – Readiness
Leonard Sugue
University of Phoenix
XECO 212 Economic Theory
Audra Sherwood
February 17, 2011

A New House – Readiness
Deciding to buy a house is a lifelong goal for many people. Imagine that you are renting a studio apartment and have just discovered you are having a baby. Your present apartment is small and far from schools and local services. You have decided to move. There are many factors that come into play when making such a large and weighty purchase. Examine the decision-making process from the perspective of an economist. In your Final Project, you use these principles and other factors to make a final decision whether to buy a house.
Purchasing a home for the first time can be overwhelming. A house can be the largest investment someone makes. It can provide advantages, but it can present disadvantages as well. The following principles can be used when deciding to purchase your first home:
 People Face Trade-offs (Mankiw, 2007)
 The Cost of Something Is What You Give Up to Get It (Mankiw, 2007)
When deciding to purchase a home, the principle “People Face Trade-offs” can be applied to help make a final decision. Making decisions requires trading off one goal against another (Mankiw, 2007). The buyer must sacrifice a little to gain a lot. First time home buyers must realize that it takes a lot of money to purchase a home. Buyers must sacrifice things such as vacations, movies, special occasions, and extracurricular activities to save money. Monies are allocated to the down payment, home insurance, taxes, and mortgage. The buyer’s time is also sacrificed when searching for a home and corresponding with the lender. Acknowledging life’s trade-offs is significant because people will make high-quality decisions when they understand the options that they have available (Mankiw, 2007).…...

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