Question

The Housing Decision: Factors and Finances

Answer 1

There are so many factors affecting a housing decision. These are as below:

1) Cost and amenities: These are basic necessities fulfilling demand – the cost should permit the pocket and amenities (like lift, car parking, etc) should meet the usefulness.

2) Opportunity cost: This is the benefit foregone for not choosing the best alternative. If money invested in housing, the benefit of earning interest out of it may be gone; such benefit is the opportunity cost what the investor has to think. Expected increase in property value in future may reduce the opportunity cost, which favors for housing.

3) Renting or buying: Equal monthly payment of housing loan is the buying cost; if it is closer to renting of a house, buying should be opted.

Finances are as below:

1) Interest rate is the main criteria for housing decision. The lower rate is always attracted for a loan.

2) Down payment: If it is high, the loan amount would be loan but borrowers want lower down payments.

3) Terms and conditions: Home loans several clause and hidden charges; these should be properly understandable. In absence of which, housing decision may be negative.