3.4 Mortgages (Due 11/10)

Last updated about 1 year ago

22 questions

Note from the author:

Learning Objectives
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.

Instructions

Learning Objectives
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.

Required

3.4 Mortgages (Due 11/10)

Last updated about 1 year ago

22 questions

Note from the author:

Learning Objectives
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.

Instructions

Learning Objectives
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.

Day 1 11/8/22

Required

Use a real estate website of your choice to find a house you can see yourself owning 20 years from now. Upload a photo of the house. Assume that you will own a home. A good website to use is Zillow.com.

What was the most important reason that helped you choose the house you did?
_______ 

How much does the house cost?
_______ 

What are the monthly payments according to the website you used?
_______

Day 2 11/9/22

Required

Over what period did the U.S. see the largest decrease in the number of households owning their own homes? UCS

Required

The shaded areas represent recessionary periods when the U.S. economy contracted. What typically happens to the homeownership rates during these periods? UCS

Required

When do you think home prices peaked? Why? UCS

Required

Based on what you see in the graph above, predict what will occur to homeownership over the next five years. UCS

What are Mortages?

VIDEO: Demystifying Mortgages 
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.

Required

How does an annual percentage rate (APR) for mortgages differ from a more traditional interest rate? UCS

Required

One downside of an adjustable-rate mortgage is that it is riskier than a fixed-rate mortgage. Explain why. UCS

Required

ARTICLE: How to Choose Between a Fixed-rate and ARM
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.

Required

Decide which type of mortgage each person listed here might choose. UCS

Carl, who is living in Lexington with his girlfriend until she finishes her med school program. 
_______ 

Tanya, who’s worked out a budget that allows her to pay her mortgage and save for her three young children’s college funds.
_______ 

Kristie, who needs lower payments for a few years until she’s done paying off her student loans, and who thinks she could then afford far greater payments.
_______ 

Day 3 11/10/22

CALCULATE: Using a Mortgage Calculator
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.

Required

Is it Better to Buy or Rent a Home?
After reading this article, answer the questions on the right.

Required

In your opinion, what are the top three reasons to BUY a home?
_______ 
_______ 
_______ 

Required

In your opinion, what are the top three reasons to RENT a home?
_______ 
_______ 
_______ 

Exit Ticket

Required

3.4 Mortgages (Due 11/10)

Learning Objectives

Learning Objectives

3.4 Mortgages (Due 11/10)

Learning Objectives

Learning Objectives

Day 1 11/8/22

Day 2 11/9/22

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

What are Mortages?

VIDEO: Demystifying 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

ARTICLE: How to Choose Between a Fixed-rate and ARM

Day 3 11/10/22

CALCULATE: Using a Mortgage Calculator

Is it Better to Buy or Rent a Home?

Exit Ticket

Day 1 11/8/22

Day 2 11/9/22

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

What are Mortages?

VIDEO: Demystifying 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

Why is choosing an appropriate mortgage potentially even more important than choosing an appropriate auto loan? UCS

ARTICLE: How to Choose Between a Fixed-rate and ARM

Day 3 11/10/22

CALCULATE: Using a Mortgage Calculator

TREMAINE:Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000Is preapproved for a 6.33% interest rate on a 30-year fixed mortgageHas saved $55,000 for a down paymentWhat will Tremaine’s monthly payment be?

TREMAINE:Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000Has 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?

Is it Better to Buy or Rent a Home?

Exit Ticket

Which of the following will likely affect the total amount of interest you will end up paying on a home loan?

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?

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

Why is choosing an appropriate mortgage potentially even more important than choosing an appropriate auto loan? UCS

TREMAINE:Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000Is preapproved for a 6.33% interest rate on a 30-year fixed mortgageHas saved $55,000 for a down paymentWhat will Tremaine’s monthly payment be?

TREMAINE:Wants a one bedroom townhouse in a trendy new development downtown; average cost is $545,000Has 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?

Which of the following will likely affect the total amount of interest you will end up paying on a home loan?

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?

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
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
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
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?