Loan Basics - RE

Loan Basics & Types of Mortgages - Review

Introduction to Loans

●Loans are like surfboards - different types for different needs

●Common loan types: student loans, mortgages, auto loans,
small business loans

●Payday loans exist but are generally not recommended

Poll

Poll Question: What kind of loans to you expect to have in your future? (Select all that apply)

• Student Loans

• Car Loan

• House Loan

• Small Business Loan

Multiple Choice

What kind of loan is not typically advised?

• Car Loan

• Home Loan

• Payday Loan

• Student Loans

Anatomy of a Loan

●Principal: The amount you're borrowing

●Interest rate: Percentage charged by the lender

●Term: Time period to repay the loan

Match

Match the following term to the description

• Principal

• Interest Rate

• Term

Amount you borrow

% that is charged to your loan

Length/Time of loan to pay off

• Amount you borrow

• % that is charged to your loan

• Length/Time of loan to pay off

Multiple Choice

Which of the following does not affect the loan and the monthly payments?

• Loan Amount

• Interest Rate

• Term

• Number of loans

Secured vs. Unsecured Loans

●Secured loans: Protected by collateral (e.g. house, car)

●Unsecured loans: No collateral required

●Secured loans typically have lower interest rates

Dropdown

​

Select answer

loans are backed by ​

Select answer

. ​

Select answer

loans are not backed by anything.

Multiple Select

Which one is an example of a secured loan with collateral? (Choose 2)

• Mortgage

• Car Loan

• Small Business Loan

• Personal Loan

Factors Affecting Interest Rates

●Credit score: Higher score = lower rates

●Loan amount and term: Larger loans or longer terms may have
higher rates

●Employment history and current debts

●Relationship with financial institution

Drag and Drop

The ​

Placeholder

your credit score, the ​

Placeholder

your interest will be. If you have a ​

Placeholder

credit score, you will pay ​

Placeholder

in interest.

Drag these tiles and drop them in the correct blank above

higher

lower

bad

more

Multiple Choice

Even if you have a good credit score, the longer the loan, the more interest you will usually pay.

• True

• False

Co-signers: Surfing Buddies for Loans

●A co-signer takes responsibility if you can't repay

●Can help you qualify for better rates

●Risky for the co-signer - their credit is affected too

Multiple Choice

A co-signer is not responsible for your loan.

• True

• False

Multiple Choice

If you have a co-signer for a loan and you do not make the payments, they will be responsible to pay the loan.

• True

• False

Poll

Would you ever co-sign for anyone? (Maybe a friend, child, niece, etc.)

• Yes

• No

Fixed vs. Variable Interest Rates

●Fixed rates: Remain constant throughout the loan term

●Variable rates: Can change based on a chosen index

●Fixed rates are predictable but usually start higher

●Variable rates can go up or down over time

Drag and Drop

​

Placeholder

interest rates stay the ​

Placeholder

throughout the length of the loan. ​

Placeholder

interest rates will ​

Placeholder

throughout the loan.

Drag these tiles and drop them in the correct blank above

Fixed

same

Variable

change

Multiple Choice

Variable rates typically start low and then raise. Usually, higher than the fixed rates.

• True

• False

Key Takeaways

●Understand the type of loan you need

●Compare interest rates and terms from different lenders

●Consider your ability to repay before taking a loan

●Improve your credit score to qualify for better rates

●Seek advice if you're unsure about loan terms

●What's the most important thing you learned about loans today?

Poll

What is the most important thing you learned/reviewed about loans? (select all that apply)

• Understand Secured vs. Unsecured Loans

• Variable vs. Fixed rates

• Loan amount, interest, and time affects monthly payment

• A co-signer responsibilities

Types of Loans Recap

Multiple Choice

When purchasing with FHA financing, a new buyer would normally do each of the following except:

• pay a mortgage insurance premium (MIP).

• apply to a local FHA office for the FHA appraisal.

• apply directly to a bank or savings and loan.

• buy a home which conforms with FHA requirements and restrictions.

Match

Match the type of loan the best phrase.

• VA loan

• FHA loan

• Conventional - Conforming

• Conventional- Nonconforming

• Fannie Mai

Gov. backed - no down pmt

Gov. backed - atleast 3.5% down

not gov. backed - can be sold on 2nd mkt

not. gov. backed - cannot be sold on 2nd

Type of Secondary Mkt

• Gov. backed - no down pmt

• Gov. backed - atleast 3.5% down

• not gov. backed - can be sold on 2nd mkt

• not. gov. backed - cannot be sold on 2nd

• Type of Secondary Mkt