House Case

A new house is an important financial decision. Many factors need to be considered before beginning the process of purchasing a house. If all aspects of the purchase are not considered, any mistake can have dire financial consequences.

One thing to consider before purchasing a house is the current mortgage rate and the forecast of the mortgage rates in the near future. Right now mortgage rates are at an all time low. With the mortgage rates at a low point, this means that the purchaser will spend less money in the long run. The mortgage rate will not stay low for a very long time. The mortgage rates are expected to rise again in the near future. In as little as a year from now, the average mortgage rate is expected to rise from 4.5% to an average of 5% (Yun, 2011).

The purchaser needs to consider government agencies and their policies that will affect the housing market. The main government agency to consider is the Federal Reserve. The Federal Reserve is the agency responsible for setting the rise and fall of interest rates and how much money is to be available to purchasers. If less money is available to purchasers and people are not able to obtain enough funds to purchase a house, the prices of houses will drop. On the contrary, if there is more money available the price of homes will rise to maximize profit for the seller.

In my opinion, the investment of buying a house is a wise one considering the purchaser has made all the right research and has all the financial means to make the commitment to paying the mortgage.