The focus of this activity is to provide students with hands-on experience in analyzing amortization schedules, a crucial aspect of mortgage loans. During this exercise, students will delve into an actual amortization schedule, which breaks down how each monthly payment is distributed between interest and principal repayment over the life of a home loan. By examining this schedule, students will gain valuable insights into how home loans work and how borrowers gradually build equity in their homes.
Following the analysis of the amortization schedule, students will be presented with a set of review questions. These questions will not only test their understanding but also encourage critical thinking about the financial aspects of homeownership and loan management.
Students will gain a comprehensive understanding of what an amortization schedule is and how it functions in the context of home loans. They will learn how monthly payments are structured to pay down both the interest and principal portions of a home loan.