BUSN380 Week 5 Threaded Discussion – Insurance Obligations & Subsistence Spending

BUSN380 Week 5 Threaded Discussion – Insurance Obligations & Subsistence Spending

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Insurance Obligations What are the financial merits of rent/lease vs. outright purchase decisions? When do you think it is appropriate in life to choose to rent, and when to purchase? Does the housing crisis of the last few years make you think twice about purchasing a home? While browsing the web I came upon a very cynical blog by a retired member of the Air Force about the risks of purchasing a home as a military buyer. The piece is pretty pessimistic and very cynical, but factual and worth heeding. Lt Col Ostrom claims: “Unless you are going to keep a house for decades, buying a home for a few years is like betting the farm at the Kentucky Derby. If you buy a home, you better have a back-up plan in case it costs you a bundle to get out of the house when the time comes. No one knows what your home market will be when it comes time to sell. Even setting aside the housing slump, that’s the way it’s always been.” “There is a misconception that real estate always goes up. See how well that goes over with any member currently trying to sell a home worth less than their mortgage debt. Home markets vary based on cities and regions of the country; I’ve talked to folks $100,000 underwater. Buyers all count on making a profit; no one figures to lose on the deal. Profit 100-percen of the time — how realistic is that? It isn’t. “ “To help paint a picture of the risk you assume when you buy a home, imagine you are within three years of retirement and you’ll need all your TSP investment value to generate additional retirement income. Would you invest 100-percent of your retirement account in stocks? No, of course not. What makes buying a house on a three-year assignment much different? “ http://www.moaa.org/usergroup_emember/usergroup_emember_financial/usergroup_emember_f inancial_homebuying.htm As we all likely know, there are many elements to the home buying decision. For example, local property taxes play a huge role in assessing the home purchase decision.
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What about closing costs? What do we come up with for the value of closing costs (excluding the down payment) by consulting local real estate organizations or by way of online research? Closing costs may include points or other origination fees, any pre-paid interest, pro-rated property taxes (if any), etc. For most loans, the buyer pays the closing costs at the close of escrow. It is comforting to know that homebuyers do not have to be at the mercy of the brokers and the lenders. Government certainly plays its part in educating and assisting people who might otherwise balk at the idea of owning a home for fear of the daunting costs. In my home state of New York, many people are put off from buying a home because it is so hard to
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BUSN380 Week 5 Threaded Discussion – Insurance Obligations & Subsistence Spending

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