Mastering Home Loans

This Lab is designed to provide students with a comprehensive understanding of mortgages, the basic components of a mortgage, amortization, the implications of late payments and defaults, and the role of Private Mortgage Insurance (PMI). The lab also aims to help students compare the financial impact of buying versus renting a home. Through hands-on activities and interactive tools, students will develop critical financial literacy skills and the ability to make informed decisions about homeownership.

Key Concepts Covered:

Home Loan Basics:

• Definition and purpose of a mortgage.
• Components of a mortgage payment: principal, interest, down payment, APR
• Impact of interest rates and loan durations on mortgage payments.
• Different parameters that affect the APR of a home loan.

In-Depth Look at Mortgages

• Amortization schedule of a mortgage.
• Principal-only payments and their effect on total interest paid.
• Students will act as mortgage brokers to help find the optimal down payment, mortgage points, and loan duration for two individuals.
• Financial implications of buying a house versus renting for different durations.
• Consequences of Late Payments and Defaults
• Homeownership responsibilities

The lab is full of highly interactive activities that cover many real-world scenarios. The Mortgage Lab provides students with essential financial literacy skills, enabling them to understand the complexities of mortgages and make informed decisions about homeownership. Encourage students to actively participate in discussions, ask questions, and reflect on what they have learned to maximize their understanding and application of the concepts covered in this lab.

The lab contains materials to introduce and set the stage for the lab, as well as materials to do final reviews and classroom discussions.