Home buying process and its financial impacts Essay

Home buying process and its pecuniary impacts - Essay Example purchasing a house can be the largest nub invested or spent upon any asset by the individual and so a c atomic number 18ful investigation is necessary ab bulge out the pros and cons of a plateful buying process 1. What are some common opportunity costs associated with the selection of housing? While selecting a house which an individual wants to buy he/she hits into consideration the apartment or the house offset and whence the individual also takes a look at the residential area in which he plans to dwell. that selecting the option of housing means that the individual has to bear some underlying costs or in some cases has to let out some opportunities in his/her way. In one word it can be termed as opportunity costs undergone during the process of housing. While buying a house it is compulsory that a fair amount needs to be given out as down pay backment. The individual has to pay a considerable sum of bullion a s security deposit plain with the consideration of rent an apartment. In both the cases one has to let out the savings interest that could return been earned the money being kept in a bank. The brokerage fee is a nonher cost involved feel for a house which could have been spent elsewhere. If the house selected is few miles away from the workplace the individual has to take the pain of a long journey every day. In case the individual is contract a house he is losing out the advantages of tax obtained from buying a house. But at the same cadence the person has to bear sufficient trouble to build a house of his choice and needs (Kapoor, 2009, p. 272). 2. What are the advantages and disadvantages of owning a home? Home Ownership has been considered as the rational form for housing with more than 70% of the British households having houses in their list of assets. Such ownership statistics for the year 1991 reveal 59% for USA and 40% for Switzerland. Home ownership is advantageous as houses are saleable assets. Increasing market value of homes has compound this merit. It also eliminates the trouble of monthly rental payments. Statistical evidences suggest that homeowners are much better than individuals rent an apartment. But the disadvantage is that few people have the money for buying a home and they go for borrowing options or mortgage. This is again a liability. Owning a home involves maintenance costs unlike renting where landlord bears all the cost for renting (Gordon, n.d). 3. How can the quality of a school system benefit even homeowners in a community who do not have school-age children? A recent study has shown that home owners send their teenage children to school more frequently than those parents living in rented apartments. Behavioral characteristics of homeowners have been attributed to this fact. Homeowners are mostly financial stable and from good background who do not tolerate bad sort of their children. Again the findings reveal that res idential stability has a positive impact on childrens education. in that location appears to be a positive relation between homeownership and educational outcomes. Renting individuals may change their houses kind of often which in turn lead to changing schools keeping in mind the distance factor. This is not the case for home owners. Changing schools prove detrimental to a childs education (Social Benefits of Homeownership and persistent Housing, 2010). 4. What factors affect a persons ability to check for a mortgage? Any bank or financial institution while mortgaging a house from an individual does a careful assessment of his/her gross income. The amount offered on mortgage depends a lot on the individuals gross income. Hence first of all a person needs to be financially stable in order to qualify for mortgage. Sudden inheritance of a large sum of money can also be gilded for qualification. Some institutions also prefer to see the loan history of the individual before giving o ut the mortgage amount. This is done to prevent default risks. In recent times many mortgage products have come up in housing markets easing the process of