Chapter 7

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

Mortgage Rates Fall Again

Posted on April 6, 2014 by Melissa Hart

Cheap mortgage rates are a bonanza for home buyers.

Currently, home mortgage rates are trending lower which is good news for home buyers.  According to a recent Freddie Mac survey, the 30-year fixed rate is 4.28 percent.  The 15-year fixed rate is 3.32 percent.

So how important is a lower home mortgage rate for a home buyer? 

  • At a rate of 6 percent, the monthly mortgage payment for a $200,000 thirty-year mortgage is $1,000 a month ($200,000 x 6% ÷ 12 = $1,000). 
  • If the rate drops to 4.28 percent, the monthly payment drops to $713 a month ($200,000 x 4.28% ÷ 12 = $713). 
  • That’s a difference of $287 each and every month.
  • Assuming the home buyer makes monthly payments for the entire 30-year period, that’s a savings of $103,320 ($287 x 12 x 30 = $103,320).

For additional information about mortgage rates and the factors that cause rates to increase or decrease go to http://money.cnn.com/2014/03/06/real_estate/mortgage-rates/index.html.

Discussion Questions

1.  What are the common mistakes people make when they finance a home?

2.  Why would you consider a 15-year mortgage instead of a 30-year mortgage?

3.  Why would you consider a 30-year mortgage instead of a 15-year mortgage?

Teaching Suggestions

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

  • Why a home buyer should compare mortgage rates when financing a home purchase.
  • The advantages and disadvantages of a 30-year and a 15-year home mortgage.
Categories: Chapter 7, Financing a Home | Tags: | Leave a comment

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