7.3A Mortgage Payments & Escrow Worksheet

Front

What is a mortgage?

Back

A mortgage is a loan specifically used to purchase real estate, where the property itself serves as collateral for the loan.

Tags

CCSS.RI.11-12.5

CCSS.RI.6.5

CCSS.RI.7.5

CCSS.RI.8.5

CCSS.RI.9-10.5

Front

What does APR stand for in mortgage terms?

Back

APR stands for Annual Percentage Rate, which represents the yearly cost of borrowing, including interest and fees.

Front

What is the difference between a 15-year and a 30-year mortgage?

Back

A 15-year mortgage has a shorter repayment term, resulting in higher monthly payments but less interest paid over time, while a 30-year mortgage has lower monthly payments but more interest paid overall.

Front

How do you calculate monthly mortgage payments?

Back

Monthly mortgage payments can be calculated using the formula: M = P[r(1+r)^n] / [(1+r)^n – 1], where M is the total monthly mortgage payment, P is the loan principal, r is the monthly interest rate, and n is the number of payments.

Front

What is escrow in relation to mortgages?

Back

Escrow is an account where funds are held by a third party to pay for property taxes and insurance on behalf of the homeowner.

Front

How do property taxes affect monthly mortgage payments?

Back

Property taxes are typically included in monthly mortgage payments through escrow, increasing the total amount paid each month.

Tags

CCSS.7.RP.A.3

Front

What is homeowners insurance?

Back

Homeowners insurance is a type of property insurance that covers losses and damages to an individual's home and assets in the home.

Front

What is the purpose of refinancing a mortgage?

Back

Refinancing a mortgage is done to obtain a lower interest rate, reduce monthly payments, or change the loan term.

Front

How do you determine the total interest paid over the life of a mortgage?

Back

Total interest paid can be calculated by subtracting the original loan amount from the total amount paid over the life of the loan.

Front

What is the significance of a lower interest rate in mortgage payments?

Back

A lower interest rate reduces the total cost of the loan and lowers monthly payments, making homeownership more affordable.

Tags

CCSS.7.RP.A.3