Category Chapter 9

Oct 8 2014

Mistakes of Homebuyers

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.
Apr 6 2014

Mortgage Rates Fall Again

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.