Risk Paper 1
Risks Involved During The Purchase Of Our Home
Class: Proj-595 Professor: Dr Madireddy
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In the spring of 2013 my family embarked on a new adventure. We moved 2800 miles from San Diego CA. to Franklinton NC. because of a promotion I accepted with my company. This was a very exciting and frightening time of transition for my family. There were many changes we had to make as well as some very important decisions to make.
The biggest decision and question we had to make and answerer was are we going to buy a home or are we going to rent? Once the decision was made we were going to buy a home many questions and decisions had to be made and many risks had to be addressed.
The risks we had to address when looking at purchasing a home include financial risks and environmental risks.
• RISKS INVOVLED DURRING THE PURCHASE OF OUR HOME
Home buying is a very ...view middle of the document...
Most of the risks involved were financially related and there were a few environmental risks we had to address as well. While some of the risks were resolved there are others that are ongoing and periodically reviewed and managed.
Financial risks that we had to look at included did we have enough money to put down, could we afford this home, was this the right investment, possibilities of defaulting, and is the home going to raise in value or lower. The environmental risks included the neighbor hood, commute to work, school district, and energy efficiency.
At the time of purchasing our home we did not do any real formal risk matrix in making our decision. When we looked at the risks we did a simple system of can it work or not. We also looked at what type of impact this would have on us financially as far as does our income allow this expense. We did talk with neighbors and other people in the community to find the ideal location that would fit our needs. One risk that I did weigh in was the cost of additional furniture needed to furnish the new home. I can also say that we weighed the difference of buying a new home vs. an older home.
However I did find that things could have gone a little simpler had we used a formal process like the ATOM methodology. When looking at managing risks there needs to be a way to identify, weigh, and resolve every risk. An ATOM methodology could prove to be useful in the future for handling and managing the other ongoing risks of homeownership like the risk of default, obsolescence, or uncovered/undiscovered disasters.
So while we did not probably perform the best or most structured risk matrix when identifying the risks of home buying there is a clear need for it. Buying real estate comes with risks. Not all homes will be assets, and you need to tread carefully to ensure you don’t over-leverage yourself and end up upside down in your mortgage. (Hawlk)
Dratch, D. (n.d.). Bankrate. Retrieved 1 24, 2015, from Bankrate.com: http://www.bankrate.com/finance/mortgages/6-must-dos-before-buying-a-home-1.aspx
Hawlk, K. (n.d.). Fee Hacks. Retrieved from Feex.com: http://www.feex.com/blog/5-financial-steps-to-take-before-buying-a-home/