Chapter 7

Home Mortgage Calculator

Posted on March 26, 2016 by Melissa Hart

“Finally, simple mortgage calculators that anyone can use.”

The mortgage calculators on this website can help home buyers estimate how much their monthly payments will be when they purchase a home.  To use the calculator, enter the following information and then click “Calculate.”  It’s that simple.

  • Home Value
  • Loan Amount
  • Interest Rate
  • Loan Start Date
  • A Percentage for Property Tax
  • A Percentage for Private Mortgage Insurance

In addition, there is information to help homebuyers compare a 30-year and a 15-year mortgage, make a rent or buy decision, and valuable information about other home purchase decisions.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the importance of finding the right mortgage when purchasing a home.
  • Calculate monthly home mortgage payments when different interest rates are chosen.
  • Illustrate the difference for the total repayment amount and monthly payment amount when the home buyer chooses a 15 year or 30 year mortgage.

Discussion Questions

  1. How important is choosing the right mortgage when you buy a home?
  2. Using the mortgage calculator at http://www.mortgagecalculator.org, determine the monthly payment for a 30-year loan for $180,000 if the interest rate is 5 percent. Assume the home purchase price is $210,000, property tax is 1.5 percent, and the PMI is 0.5 percent.
  3. What is the monthly payment for the above loan if the interest rate decreases to 4 percent? Over the 30-year period, how much did you save if the interest rate is 4 percent compared to 5 percent?
Categories: Chapter 7, Home Buying | Tags: , , | Leave a comment

New rules for Reverse Mortgages

Posted on November 7, 2015 by Melissa Hart

The most popular reverse mortgage program is the Home Equity Conversion Mortgage (HECM), which is insured by Housing and Urban Development (HUD).

New rules from HUD add protections for certain surviving spouses after the death of a reverse mortgage borrower.   Until recently, if the non-borrower spouse was not on the loan, he or she was not entitled to remain in the property following the death of the borrower.  But under HUD’s new rules, non-borrowing, surviving spouse can remain in the home if specific conditions are met.  These changes apply to reverse mortgage loans in which the borrowing spouse applied for a reverse mortgage before August 2014.  In addition, the couple must have resided in the property as their principal residence throughout the duration of the HECM, and taxes, property insurance and any other special assessments that may be required by local or state law must have been paid.

The concern regarding non-borrowing spouses has been a source of many reverse mortgage issues.  Here’s why: The amount of money a reverse mortgage borrower can draw is based in part on the age of the youngest borrower—and unless all borrowers are 62 or over, they would not qualify for a reverse mortgage.

For more information:

Consumer Advisory

Reverse Mortgage Information

Teaching Suggestions

  • Ask students to comment on the statement: “While a reverse mortgage can be used to supplement monthly income, some borrowers may face unintended obstacles and consequences”. What might be those consequences?
  • Are the new rules from HUD effective in protecting senior citizens? Why or why not?

Discussion Questions

  1. Why should you talk to a qualified professional before deciding to get a reverse mortgage?
  2. Where can you find HUD-approved HECM Counseling Agencies near you?
Categories: Chapter 7, Financing a Home, Retirement Planning, Savings | Tags: , | Leave a comment

A Look at Reverse Mortgages

Posted on November 4, 2015 by Melissa Hart

Every day, approximately 10,000 people in the United States turn age 62, according to the Census Bureau.  And if they are homeowners, they may be eligible to borrow against a portion of the equity in their house by using a loan called a “reverse mortgage.”

The Consumer Financial Protection Bureau (CFPB) is warning consumers about potentially misleading reverse mortgage advertising.  In June 2015, the CFPB issued a consumer advisory stating that many television, radio, print and Internet advertisements for reverse mortgages had “incomplete and inaccurate statements used to describe the loans”.  In addition, most of the important loan requirements were often buried in fine print if they were even mentioned at all.  These advertisements may leave older homeowners with the false impression that reverse mortgage loans are a risk-free solution to financial gaps in retirement.” For example, the CFPB said, “After looking at a variety of ads, many homeowners we spoke to didn’t realize reverse mortgage loans need to be repaid.”

For more information, click here.

Teaching Suggestions

  • Visit the website of the American Association of Retired Person (AARP) at aarp.org. Locate the AARP Home Equity Information Center, which presents facts about reverse mortgages.  Then prepare a report on how reverse mortgages work.
  • Ask students to visit Fannie Mae’s website at fanniemae.com/homebuyer to find out who is eligible for reverse mortgages, and what other choices are available to borrowers.

Discussion Questions

  1. Why should you consult a qualified professional before you decide to get a reverse mortgage?
  2. Where can you find Housing and Urban Development-approved Home Equity Conversion Mortgage counseling agencies near you?
Categories: Chapter 7, Home Buying, Retirement Planning, Savings | Tags: , | Leave a comment

Mortgage Calculator

Posted on October 7, 2015 by Melissa Hart

“A house is the largest purchase most of us will ever make so it’s important to calculate what your mortgage payment will be and how much you can afford.” 

While technically not the usual article you expect to read on the Kapoor Money Minute blog, the information about this Bankrate mortgage calculator can help you determine how much your monthly home mortgage payment will be.  To use the calculator, you simply input the requested financial information in the boxes provided and the calculator will determine your monthly mortgage payment.  You can also access an amortization table that shows how much of each payment is for interest and how is used to reduce the unpaid balance on your home mortgage.

In addition to this calculator, the Bankrate.com site provides additional calculators and information on many personal financial topics.  Take a look and be surprised at the amount of useful information available on this site.

 For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Use the calculator to help students determine how much house they can afford.
  • Discuss other expenses that could increase the cost of home ownership.

Discussion Questions

  1. Take a look at the information that you must enter in order to use the mortgage calculator described in this article.  How do the amount of the mortgage, interest rate, and term of loan impact the monthly payment for your home mortgage?
  2. In addition to your monthly home mortgage payment, what other costs can you expect when you buy a home?
  3. Buying a home is a “big” financial decision. Are there additional factors besides mortgage payment and other home ownership expenses that you should consider before making a decision to buy a home?
Categories: Chapter 7, Home Buying | Tags: , , | Leave a comment

House Rich, Cash Poor: How One Couple’s “American Dream” Home Nearly Tanked Their Finances

Posted on July 15, 2015 by Melissa Hart

“While our original $150,000–$170,000 price range would have put our housing costs at a manageable 30% of our total income, springing for a $200,000 loan shot that number up to just shy of 50%.“

For many people, a logical step after completing college is often purchasing a home and inching closer to the American dream.  And yet, there are pitfalls to obtaining a home that can lead to financial stress and the inability to reach important short-term and long-term financial goals.

This article describes how one couple took all the right steps to prepare for a home purchase, but eventually decided to purchase a home that cost more than they planned to spend on housing.  The reason was simple:  They fell in love with a home that was too expensive when compared to their total income.  The article continues to describe what happens next in their attempt to regain their financial health.

For more information, click here.

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Stress the necessity of preparing a realistic budget that reflects mortgage payments, insurance, taxes, repairs, etc when purchasing a home.
  • Share the advantages and disadvantages of owning versus renting a home.

Discussion Questions

  1. Given your goals and lifestyle, how important is home ownership to you?
  2. What steps should you take to prepare for purchasing your dream home?
  3. Assume you have found your dream home and you can afford the payments, insurance, taxes, repairs, etc. What steps are necessary to negotiate the purchase and obtain financing?
Categories: Chapter 7, Home Buying, Purchasing Strategies | Tags: , , | Leave a comment

Is This Debt Collector Legitimate?

Posted on May 23, 2015 by Melissa Hart

How can you verify whether or not a debt collector is legitimate?  Below are a few warning signs that signal a debt collection scam:

  • The debt collector threatens you. Legitimate debt collectors probably won’t claim that they will have you arrested or claim that they or their employee are law enforcement officers.
  • The debt collector refuses to give you information about your debt or trying to collect a debt you do not recognize.
  • The debt collector refuses to give a mailing address or phone number.
  • The debt collector asks you for sensitive personal financial information.

Tell the caller that you refuse to discuss any debt until you get a written “validation notice.”  This notice must include the amount of the debt, the name of the creditor, and a description of certain rights under the federal Fair Debt Collection Practices Act.

For additional information and to learn more on debt collection practices, click here.

Teaching Suggestions

  • Ask students to draft a sample complaint letter explaining that the debt is not legitimate and demanding the debt collector stop contacting you.
  • Ask students to compile a list of governmental and nongovernmental agencies where consumers can send debt collection complaints.

Discussion Questions

  1. Do all states require debt collectors to be licensed?
  2. If the debt collector is licensed in your state and he/she is not acting properly, what are your remedies?
  3. Who enforces the Fair Debt Collection Practices Act and how this law protects consumers?
Categories: Chapter 7, Debt | Tags: | Leave a comment

Reverse Mortgage Complaints

Posted on April 4, 2015 by Melissa Hart

Reverse mortgages are a special type of loan that allows homeowners, 62 and older, to borrow against the accrued equity in their homes.  Reverse mortgages can help some older homeowners meet financial needs, but they can jeopardize retirement security if not used carefully.

In February 2015, the Consumer Financial Protection Bureau (CFPB) released a report that some homeowners have experienced problems with reverse mortgages.  The most common reverse mortgage complaint is about difficulty with changing the loan terms and problems communicating with loan servicers.  Some consumers, for example, express frustration about slow, inconsistent communication from their reverse mortgage loan servicer.

If you are having a problem with your reverse mortgage or having problems getting through to your mortgage servicer, you can submit a complaint to CFPB online or by calling (855) 411-2372 or TTY/TDD (855) 729-2372.  The CFPB will forward your complaint to the company and work to get you a response within 15 days.

For additional information, click here.

Teaching Suggestions:

  • How can a person access funds from a reverse mortgage?
  • Ask students what other alternatives might be available before settling for a reverse mortgage?

Discussion Questions

  1. What is the purpose of a reverse mortgage?
  2. Can people with very low equity in their home qualify for a reverse mortgage?
  3. How can people protect themselves from dishonest reverse mortgage providers that charge exorbitant fees?
Categories: Chapter 7, Financing a Home | Tags: , | Leave a comment

Mortgage Comparison Calculator

Posted on March 11, 2015 by Melissa Hart

Many home buyers do not shop around for a mortgage. Failing to comparison shop for a mortgage often means higher monthly payments and paying thousands of dollars more in interest over the life of the loan.  A recent survey of mortgage borrowers revealed that:

  • Nearly half of borrowers only consider one lender or broker before applying for a mortgage.
  • Over three-fourths of borrowers only apply to one lender.
  • Lenders and brokers were the most common mortgage information source; with real estate agent also used. Other source of information were websites, financial and housing counselors, friends, relatives and coworkers.

Home buyers should complete an application with multiple lenders or brokers in an effort to get a better deal.  Also, ask questions and take actions to help you find the best mortgage for you

For additional information on comparing mortgage rates, click here:

For the complete report on study, click here:

A mortgage comparison calculator is available, click here:

Teaching Suggestions

  • Have students interview people who own homes to obtain information about the mortgage process they used.
  • Have students prepare a data summary of mortgage rates for different lenders in their area.

Discussion Questions 

  1. What actions can be taken to reduce mortgage costs?
  2. Describe factors that a person should consider when choosing among several mortgage lenders.
Categories: Chapter 7, Financing a Home, Home Buying | Tags: , , | Leave a comment

Rents Are Rising . . . And So Are Evictions

Posted on November 22, 2014 by Melissa Hart

“The average renter now spends 30% of their income on rent, up from a longtime average of about 25%, according to Zillow.”

Over the past year, average salaries have increased 1.8 percent.  At the same time, the average rental cost for apartments, houses, condos, and other housing has risen 7 percent.

The Neighborhood Law Clinic at the University of Wisconsin Law School estimates that several million families a year face evictions nationwide.  In fact, for many tenants, an unexpected emergency or unexpected expense can lead to eviction.  Most often, evicted tenants face a very difficult time finding a new home that is often in a different neighborhood or a home that is not as nice as their last home.

While the major reason for a tenant’s eviction is not paying the rent, some landlords will look for minor violations like loud noise or having a pet when there is a no pet policy to evict tenants.  Then, landlords will rent to a new tenant that is willing (and able) to pay higher rent.  In some cases, the owner of the rental property will sell the property or convert the property to condos.

For more information go to http://money.cnn.com/2014/10/29/real_estate/evicted/index.html

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Discuss the importance of choosing a housing option that you can afford.
  • Stress the importance of budgeting for housing and other major expenses and establishing an emergency fund.

Discussion Questions

  1. While most everyone wants a nice, safe place to call home.  What factors affect your choice when choosing an apartment, condo, or house to rent or buy?
  2. Does the fact that the average tenant spends 25 to 30 percent of their income on rent and that there are no tax advantages or equity buildup when you rent, encourage you to purchase your own home? Justify your decision to rent or buy.
Categories: Chapter 7, Home Buying | Tags: | Leave a comment

Mistakes of Homebuyers

Posted on October 8, 2014 by Melissa Hart

An increasing number of homebuyers are coming into the market. However, along with that trend, is an increasing number of financial regrets due to mistakes such as:

  •  considering that renting may still be a viable financial choice in some situations; for example, if you may be moving due to a job or other circumstances.
  • with rising housing prices and higher mortgage rates, some buyers may not be competitive when bidding on a property.
  • other debts (such as a high car loan) may limit the monthly payment a person can afford.
  • putting too much faith in online property prices, which can give a false sense of true home values.
  • skipping the home inspection can result in not being aware of subtle home defects.
  • unrealistic expectations of the future appreciation of the home.

For additional information on mistakes made by homebuyers go to:

http://www.cnbc.com/id/101837611

Teaching Suggestions

  • Have students research suggestions for avoiding home buying mistakes.
  • Ask students create an in-class presentation with suggestions for avoiding home buying mistakes.

 Discussion Questions 

  1. What actions might be taken to avoid these home buying mistakes?
  2. Describe other difficult situations that a person might encounter in process of buying a home.
Categories: Chapter 7, Home Buying, Purchasing Strategies | Tags: , , | Leave a comment

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