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A New House Risks and Benefits

In: Social Issues

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The current housing market is currently seeing the lowest interest rates for mortgages in recent history. With so many houses in foreclosures and even more neighborhoods and housing markets suffering from the current economic crisis the likelihood of people buying homes has decreased over the past few years. With federal agencies such as the Housing and Urban Development (HUD), The Federal Reserve System, and FEMA, helping to determine housing costs, developmental costs, annual living expenses, and other variables play specific parts in determining market value for homes as well as interest rates on mortgages. Prime lending rates are a huge factor. It will determine whether or not a lender may borrow money from the Federal Reserve to finance the mortgages that people are applying for. These loans also include construction loans for new homes, which will affect new home sales, prices, and the market. Higher interest rates will raise wholesale home prices because of the cost of borrowing it however when interest rates are too high people can no longer borrow the money making the prices begin their decline. The government bodies that influence the national fiscal policies that potentially affect the housing market are the Federal Reserve. This body decides the rise and fall of interest rates. The risks in buying a home right now are that if the housing markets continue to decline your homes value may end up being less than what you still owe with your mortgage company. The benefits are that if you purchase a home it is your property, it is part of your estate and is basically an investment as typically housing markets see an overall increase in value over the years and if you maintain the value of your home it will end up being worth more if and when you sell…...

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