3.4 Mortgages (Due 11/10)
star
star
star
star
star
Posljednje ažuriranje over 1 year ago
22 questions
Napomena autora:
Obavezno
50
Obavezno
10
Obavezno
10
Obavezno
10
Obavezno
10
Students will be able to
Explain what a mortgage is and why most Americans require one to finance a home
Use a mortgage calculator to explore how down payment, credit score, interest rate, and term all impact the total cost of buying a home
Distinguish between fixed- and adjustable-rate mortgages
National Standards for Personal Financial Education
Managing Credit
2a: Give examples of unsecured and secured loans
2c: Compare what happens if a borrower fails to make required payments on a secured loan, such as an auto loan or a home mortgage, versus failing to pay a credit card account
3b: Differentiate between adjustable-rate and fixed-rate mortgages
3c: Compare monthly mortgage payments for loans that differ in repayment period, amount borrowed, and interest rate
6a: Identify examples of loans that may require down payments
6c: For a specified loan amount, compare the monthly loan payment with a 10% down payment versus a 20% down payment
Complete the entire document and use full sentences when prompted for full credit.
Students will be able to
Explain what a mortgage is and why most Americans require one to finance a home
Use a mortgage calculator to explore how down payment, credit score, interest rate, and term all impact the total cost of buying a home
Distinguish between fixed- and adjustable-rate mortgages
National Standards for Personal Financial Education
Managing Credit
2a: Give examples of unsecured and secured loans
2c: Compare what happens if a borrower fails to make required payments on a secured loan, such as an auto loan or a home mortgage, versus failing to pay a credit card account
3b: Differentiate between adjustable-rate and fixed-rate mortgages
3c: Compare monthly mortgage payments for loans that differ in repayment period, amount borrowed, and interest rate
6a: Identify examples of loans that may require down payments
6c: For a specified loan amount, compare the monthly loan payment with a 10% down payment versus a 20% down payment
Complete the entire document and use full sentences when prompted for full credit.
Over what period did the U.S. see the largest decrease in the number of households owning their own homes? UCS
The shaded areas represent recessionary periods when the U.S. economy contracted. What typically happens to the homeownership rates during these periods? UCS
When do you think home prices peaked? Why? UCS
Based on what you see in the graph above, predict what will occur to homeownership over the next five years. UCS
Since the start of the 21st century, over half of US households have been homeowners rather than renters. What you may or may not know is that most homeowners can’t afford to buy their homes in one cash payment; instead, they take out a mortgage. Watch this video to answer the questions about mortgages.
How does an annual percentage rate (APR) for mortgages differ from a more traditional interest rate? UCS
One downside of an adjustable-rate mortgage is that it is riskier than a fixed-rate mortgage. Explain why. UCS
In the video’s amortization example, the borrower makes a $711 payment, where $375 goes toward paying interest and $336 goes toward paying the principal. Should the borrower be worried that they’ll never pay off the mortgage? Why or why not? UCS
An adjustable rate mortgage is sometimes called an ARM for short. Read the linked portion (How to Choose Between a Fixed-Rate and Adjustable-Rate Mortgage) of this article for some tips on how to choose between fixed-rate and ARMs, stopping after the Pro/Con chart the article provides.
After reading this article, answer the questions on the right.
Which of the following will likely affect the total amount of interest you will end up paying on a home loan?
Why is choosing an appropriate mortgage potentially even more important than choosing an appropriate auto loan? UCS
The individuals in the following scenarios are currently independent adults, looking to buy a home. Each of them, fortunately, took a personal finance class in high school and learned the value of doing some preliminary work on a mortgage calculator before determining their price range. Use the Bankrate.com Mortgage Calculator for this activity. *Hint: Click the Amortization tab on the calculator screen to see more details about each loan.
Note: When answering questions about how much monthly payments will be, include the cost of insurance and taxes.
TREMAINE:
Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000
Is preapproved for a 6.33% interest rate on a 30-year fixed mortgage
Has saved $55,000 for a down payment
What will Tremaine’s monthly payment be?
TREMAINE:
Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000
Is preapproved for a 6.33% interest rate on a 30-year fixed mortgage
Has saved $55,000 for a down payment
How much total interest will he pay over the course of the mortgage? (Hint: Click on the Amortization tab)
TREMAINE:
Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000
Has saved $55,000 for a down payment
If Tremaine shopped around to find a bank that offered a better interest rate until he had found a rate of 5.83%. What will his monthly payment be?
TREMAINE:
Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000
Has saved $55,000 for a down payment
If Tremaine shopped around to find a bank that offered a better interest rate until he had found a rate of 5.83%. How much total interest will he pay over the course of the mortgage?
TREMAINE:
Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000
Has saved $55,000 for a down payment
If Tremaine shopped around to find a bank that offered a better interest rate until he had found a rate of 5.83%. How much money will he save by finding a .5% lower rate?
CARLIN:
Has been renting a two-bedroom apartment with her husband and 3 kids; wants to move into a three-bedroom home instead
Took her five years, but she has saved $30,000 for a down payment
Homes in her small town are typically selling for $250,000 to $350,000
Is preapproved for a 6.11% interest rate on a 30-year fixed mortgage
Needs her monthly payment to be less than $1700
Rounded to the nearest $1000, what’s the most expensive house Carlin could buy?
CARLIN:
Has been renting a two-bedroom apartment with her husband and 3 kids; wants to move into a three-bedroom home instead
Took her five years, but she has saved $30,000 for a down payment
Homes in her small town are typically selling for $250,000 to $350,000
Is preapproved for a 6.11% interest rate on a 30-year fixed mortgage
Needs her monthly payment to be less than $1700
How much total interest will she pay over the course of the mortgage for this house?
Which statement accurately describes the relationship between interest, payments, and amortization?
Denise buys a $100,000 condo using a $20,000 down payment on a 30-year fixed-rate loan. After 5 years of payments, she's made approximately $24,000 in payments and still owes approximately $75,000. How much equity does Denise have in her house?