Home Loan Simulation

In this worksheet, students will help a person plan a mortgage by considering their financial details, including total savings, monthly salary, available money for monthly mortgage payments, and the purchase price of a house. Students will decide on the down payment, mortgage points to be purchased, and the loan duration to ensure that the total interest paid is less than $160,000 and the monthly payment fits within the person’s budget. They will also answer a set of review questions to solidify their understanding.

Activities:

• Introduction to Mortgages: Students will receive an overview of mortgages, including key terminologies such as APR, down payment, mortgage points, and loan duration.
• Scenario Presentation: Students will be provided with the financial details of a person, including: Total savings, Monthly salary, Money available for monthly mortgage payment, Purchase price of the house.
• Mortgage Planning: Students will: Decide on the down payment amount from the total savings, Determine the number of mortgage points to be purchased (if any), Choose the loan duration to ensure the total interest paid is less than $160,000 and the monthly payment is within the budget.
• Reflection: Guided questions will help students reflect on the importance of mortgage planning and making informed financial decisions based on personal financial constraints.

Key Learning Outcomes:

• Mortgage Terminology Comprehension: Students will understand key mortgage terminologies and their significance in mortgage planning.
• Financial Data Analysis: Students will develop skills in analyzing financial data to make informed mortgage decisions.
• Optimized Mortgage Planning: Students will learn how to optimize mortgage parameters to minimize total interest and ensure affordability.