Video
- 60 minutes
Lesson Prep
- This lesson will talk about buying a home in cash or with a 15 year mortgage
Checklist
- Welcome back, everyone! We’re eight lessons in, so let’s take a minute and celebrate some wins: Has anyone moved forward in the Baby Steps since Lesson 1?
- Review the Baby Steps
- Do a budget checkup
- How has living on a budget been going this week compared to the very first week you started?
- Is budgeting becoming more of a habit for you? How so?
- Instruct everyone to turn to page 117 in their Member Workbook
- Take attendance and watch the video
- Look for your coordinator cue before the One-Minute Takeaway to get ready for the Activity
Notes
- A house is the largest financial investment you will ever make
- Here’s your home buying plan
- A 15-year fixed-rate mortgage
- 10% down payment
- Monthly payments <= 25% of take-home pay (including HOA fees, insurance and taxes)
Mortgages to avoid
- Adjustable-rate mortgage (ARM)
- Interest-only mortgage
- Reverse mortgage
- Subprime mortgage
- Balloon mortgage
- United States Department of Agriculture/Rural Housing Service (USDA/RHS) mortgage
- Accelerated or biweekly payoff programs
- Any mortgage with a prepayment penalty
Best way to finance a house
- BEST - Conventional loan (Fannie Mae, FNMA)
- FHA loan
- VA loan
Real Estate Relator
- Interview at least three Real Estate agents
Activities
- Let’s turn to page 123 and take a few minutes to read and work through the case study. This is a basic example to help demonstrate how different mortgage options can impact your finances.
Discussion Questions
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When you picture your dream home, what do you see? What parts of your home stand out, and why are they important to you?
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Based on what you’ve learned from Dave, how do you know if you have too much house?
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Based on your answer to the last question, do you need to make any adjustments to your housing situation? If so, what? Refinance? Downsize? Throw more money at your mortgage?
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If you’re a homeowner, think about life without a mortgage. What could you do with the extra money that’s currently going toward payments? If you’re renting, how do you feel about owning a home someday? How could you save up for one?
Wrap Up
- Go to page 125 and read through the action steps
- Remind class members to complete their last Financial Snapshot.
- Keep working on your budget
- You need to be aware of how much you have spent on certain categories
- You need to make a monthly budget
- You need to be having Budget Committee Meetings