Foundations of Finance

If you’re trying to sell your home, this is a bad time to do it. But, if you’re thinking about buying your first home, now is the time to take advantage of the low mortgage rates and pay for a home with the same amount you’re paying for rent each month. Here are a few first time home buyer tips that will help you get a home and pay as little as possible for it.

1. Know The Market

Today’s economy is not like it used to be. As little as 4 years ago, home sales were on the rise across most of the United States. General contractors were having trouble keeping up with the demand for homes, and the price of homes continued to rise. Investors were buying them two or three at a time, with the hopes that the economy would continue to thrive and they could sell their property for a lot more than they bought it for.

Then, in early 2006, with almost no warning, the housing market climaxed, leveled off, and started to drop. Housing prices slowly began to drop. . .and drop. . .and drop. Now it is 2010 and there are no signs of improvement. Since 1990, the Case-shiller index shows that the market has not declined until the market crash of 2006. That’s 16 years of steady increase. But now that’s in the past. We’re in the now. So what can we do about it?

2. Don’t buy a home for more than you can afford

Another first time home buyer tip is keeping your budget. Buying homes that are too big and too expensive is what got us into the housing market mess we’re in now. There are plenty of websites that will give you a free estimate on what you will pay monthly for your mortgage. If you are buying a home with your spouse, a good idea is to plan on spending the income of one spouse each month on the mortgage, which leaves room in case one of you loses a job or there are other unforeseen financial strains. Don’t forget about including taxes and homeowners insurance into your budget. Figure out how much you want to spend on a home, and don’t go over budget. Again, there are plenty of options in today’s market, so be patient.

3. Do Your Research

Buying a home is a major life decision, and it’s consequences will be lived with for a long time. Research the neighborhood surrounding your home. Talking to your future neighbors is a great way to find out about the neighborhood, crime rates, education, local government, etc. and most people are willing to talk. Think about how far away the mall is, if there’s a park nearby. If you see gang signs and graffiti on every corner, you may want to consider someplace else. Be patient. The right home will find you.

4. Buy A Foreclosed Home

One of the biggest causes of the housing crash was banks and financial institutions lending mortgages at 5 to 10 times the annual income of people. That means that if someone made $100,000 in a year, the bank would lend them $500,000 or even up to $1,000,000. Most people were okay with that, because if the market continued to rise, then their home would be worth a lot more than they bought it, and they would make money when they sold it. But when the crash hit, many people owed the banks a lot more than their homes were worth. People were simply walking away from their homes, and foreclosures rose rapidly.

When a home is foreclosed, it means that the owner rights are taken away from the owner and given to the lender (usually a bank), so that the lender can try and sell it and make back some of the debt that the owner has incurred. Lots of times these home go up for auction, and that is where first time home buyers can find a great home for thousands of dollars less than it is worth.

5. Don’t own the nicest house on the block

When buying a home, even in a down market, it’s important to remember that you will most likely not live in one place your entire life. Try and find a home in a nice neighborhood that is a little bit smaller or older than the majority of the houses around you. This will increase the value of the home, and give you some leeway in making improvements. Don’t get carried away, either. Keeping up with the Jones’ is not a happy way to live.

By following these first time home buyer tips, buying your first home will be a solid investment, and not a financial burden.

Money is anything that is used by an economy to purchase goods and services. The fact that currency is issued by the government does not necessarily make it money.

For example, the 100 dollar bill is issued by the US government, but how many people in the united states actually pay for things with $100 cash? Answer: not that many. So the bill is currency, but it is hinging on the edge of not being a form of money.

Here are some interesting forms of money from all around the world:

Forms of money

1. miniaturized tools
2. miniaturized swords
3. cowry shells
4. slabs of salt
5. beaded belts (wampum)
6. giant stone wheels
7. tobacco
8. electronic transactions

As illustrated in the list above, things such as tobacco and cowry shells (which are not issued specifically as a form of government currency) are used as money in some places. They are simply used to purchase goods and services.

On Wednesday the House voted a 241-181 vote to extend Tax Breaks for one year. But next year these tax breaks could be taken away. This new year of tax breaks will be offset by a rising permanent income tax that may or may not begin before the tax breaks are scheduled to expire at the end of this year.

The tax breaks have helped create jobs and have made it so that the economy could get back on its feet, but will the introduction of a higher income tax and all breaks taken away help to do the opposite?

According to the Wall Street Journal some Republicans criticize that the rise in income tax will only to be permanent to some so as to extend the tax break another year. “With the decision we are facing today, we should be encouraging business investment, not discouraging it through higher taxes,” Rep. Dave Camp (R., Mich.), said during House floor debate Wednesday.

There are many who believe this issue should be studied more so that we can understand what this kind of increase in taxes will do to the economy. I, personally, agree that we need to look into this issue more. A rise in taxes isn’t the answer. I may not know a whole lot about how the economy works but it seems that a good idea would be to first ween the economy off the tax breaks and see how it stands on its own before giving it a load to carry after its recent down fall. Hopefully congress will figure out what its doing in the next year so that we don’t witness another recession before this one is fully over.