Personal Finance L8.3 Mortgages

Mortgages

Personal Finance

Mrs. Reynolds

What is a Mortgage?

• Money borrowed (loan) for the purpose of purchasing property, usually a house.

• Property is used as collateral

• Most common mortgages have 15-30 year terms.

Mortgage Basics

Mortgage Calculator

• A mortgage calculator allows you to see what your monthly payments may be based on interest rate, down payment, and principal amount.

• Also allows you to see how much interest you will be paying

How much Home Can You Afford?

• Average rule of thumb:

  • You can buy a home costing 3 times your annual salary

• You are responsible for EVERYTHING!

• Own the property and no longer have to make payments after mortgage is paid

• Good if you plan to live in an area for years.

Buy

• Landlord responsible for repairs

• No property owned at the end of lease

• Good if you plan to live in an area for a short amount of time

Rent

Rent or Buy?

Categorize

Options (4)

Morgage

Student Loan

Credit Card

HELOC

Organize these loans into the right categories

Close Ended

Open Ended

Categorize

Options (4)

Student loan

Vehicle Loan

Morgage

Credit Card

Organize these options into the right categories

Secure Loan

Unsecure Loan

Multiple Select

Which 2 types of loans can cost you to pay more in interest than the original amount of the loan ?

• Mortgage

• Car Title Loans

• Vehicle Bank Loan

• Payday Loan

A fixed rate mortgage is...

a loan to finance the purchase of real estate, usually with specified payment periods and a fixed interest rate.

The borrower (mortgagor) gives the lender (mortgagee) a right of ownership on the property as collateral for the loan.

How do Mortgages Work?

Mortgages are pretty simple. You are given money by a bank to buy a house. You pay back the bank over time with interest. In case the person getting the loan refuses to pay it, the bank can simply claim the house.

Why are Mortgages Important?

A mortgage is a good option when you don't have the money to buy a house at the moment since it involves monthly payments and not paying all at once. Mortgages can also help by doing the following: increasing your credit score, giving a tax advantage (known as a mortgage interest deduction), and allowing one to have money to use on other things.

​What is a Mortgage?

A mortgage is a loan that is used to buy some sort of property and land, typically a house. The lender is paid periodically, with interest added to the payments. Failure to pay within 120 days will result in the property potentially being taken by the lender, which is known as a foreclosure.