Category Financing a Home

Mar 11 2015

Mortgage Comparison Calculator

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.
Feb 21 2015

The One Financial Mistake that Could Cost Homeowners a Bundle

“Interest rates have bounced around historical lows for years, yet a surprising number of homeowners who could benefit from a refinancing still haven’t taken advantage of the potential cost savings.”

In this article, Marine Cole points out some surprising facts about interest rates and the reasons why people don’t refinance their homes.  According to Ms. Cole and other experts, some people are simply unaware of their current rate or don’t have the get-up-and gumption to refinance.  Other factors include procrastination, mistrust, and the inability to understand complex decisions may also be barriers to refinancing.

The article also points out that the decision to refinance could result in thousands of dollars in savings for the homeowner.  For example, refinancing a 30-year, $200,000 mortgage from 6.5 percent to a current rate of 3.35 percent will save approximately $130,000 in interest payments over the life of the loan.

For more information, click here. 

Teaching Suggestions

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

  • Stress the importance of making sound financial decisions not only when buying or refinancing a home, but other aspects of your financial life.
  • Discuss the reasons mentioned in this article that describe why people would not refinance and take advantage of lower interest rates for buying or refinancing a home.

Discussion Questions

  1. How important is comparing interest rates when either purchasing a home or refinancing an existing home mortgage?
  2. According to this article, there are many reasons why people don’t refinance their home. If you were refinancing a home mortgage, what would be your major obstacle to refinancing an existing home mortgage?  How could you overcome this obstacle?
  3. Assuming you had a chance to refinance your home and save $100,000 over the life of the loan, would you refinance? Explain the factors that would influence your decision.
Feb 18 2015

The Seven Baby Steps (Dave Ramsey)

“Get out of debt the same way you learned to walk–one step at a time.”

This article describes Dave Ramsey’s seven steps that anyone can take to get out of debt and begin to manage their personal finances.  These seven basic principles have been taught by Mr. Ramsey via radio, books, Financial Peace University, live events, and online.  Listed below are the seven steps discussed in this article.  Note:  You can get more information about each step by clicking on the “Learn More” tab.

  1. Begin by creating a $1,000 emergency fund.
  2. Pay off all debt using the debt snowball .
  3. Save 3 to 6 months of expenses in a savings account.
  4. Invest 15 percent of household income into Roth IRAs and pre-tax retirement accounts.
  5. Create a college funding plan for your children.
  6. Pay off your home mortgage early.
  7. Build wealth and give.

For more information, click here. 

Teaching Suggestions

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

  • Ask students visit the Dave Ramsey website.
  • Discuss some or all of the seven baby steps described in this article. Reminder:  Students can get more information by clicking on the “Learn More” tab.

Discussion Questions

  1. How can the seven baby steps help you manage your personal finances?
  2. Do the steps in this article make you want to change your priorities and what’s important in your life? Justify your answer.
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.