Suggested Money Lesson Plan
for this Worksheet
Questions for discussion:
How
do people buy houses?
What
is a mortgage?
Background Information:
See
information on home mortgage basics for
background information on mortgages.
Lesson:
Take
the students though the steps of understanding the basic mortgage loan
calculation on the worksheet.
A house is often the most expensive item that
people will purchase in their lifetime. Since a house is expensive, the way that
many people are able to afford a home is by taking a loan, also
called a mortgage. A mortgage loan is a loan, often by a
bank, that people use to purchase a home.
To decide how large
a mortgage you might need, there are several different items you will need to
look at. First, you will not likely be able to get a loan for the full
purchase price of the house. This is because lenders,
require that people who take mortgages pay a percent of the purchase price
immediately. This is known as the down payment. Down payments
are often 20% of the purchase price of the house. In
addition, there will be other costs that you will have to pay to your lender.
These expenses included with a mortgage when purchasing a house are known as
closing costs. Often, these closing costs may be included in the total
mortgage loan.
Vocabulary:
Mortgage Loan
Closing Costs
Amount Financed
Down
Payment
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