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Warm Up

Warm Up. How are the obligations of owning a home different from renting? What are the methods used by people used to buy housing?. Owning a Home. Discussion What criteria do people look for when buying a home? What things draw people to buy a home in certain areas?

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Warm Up

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  1. Warm Up • How are the obligations of owning a home different from renting? • What are the methods used by people used to buy housing?

  2. Owning a Home • Discussion • What criteria do people look for when buying a home? • What things draw people to buy a home in certain areas? • What would you prefer, renting or buying?

  3. Transitioning from Renting to Owning • Compare the benefits of renting and owning • consider situations when owning or renting could be appropriate • long term v. short term housing needs • market conditions • Be aware of the monetary requirements for owning a home • As the owner, you are responsible for all maintenance of the property

  4. Mortgages • Mortgage: a specific type of loan that is used to buy real estate • Homeowners with a fixed-rate mortgage can expect to pay the same amount every year for the duration of the loan • Many home buyers have to use a large portion of their savings for a down payment • If you fail to uphold your obligations to the bank, your house will be foreclosed

  5. The interest rate that a bank charges depends on the term of the loan. Why is the interest rate on a 30-year fixed-rate mortgage higher than the rate on a 15-year fixed-rate mortgage?

  6. 2000s Housing Crisis • Beginning in the 1990s, U.S. banks decided to issue “subprime” loans to people seeking to purchase homes • The term “subprime” refers to loans that are made to borrowers with an unfavorable credit history • The higher interest rate banks charge because of the greater risk makes these loans more profitable • A sharp rise in foreclosures (the seizure of property from borrowers who are unable to repay their loans) occurred around 2007

  7. Closing Based on our discussion of mortgages and the 2008 housing crisis, what rules should banks have to follow when they give a mortgage to new homeowners? Explain why you feel each rule is needed

  8. http://www.cc.com/video-clips/g1vl91/the-daily-show-with-jon-stewart-foreclosure-crisishttp://www.cc.com/video-clips/g1vl91/the-daily-show-with-jon-stewart-foreclosure-crisis • https://www.youtube.com/watch?v=PgJLkDGaCwo

  9. https://www.youtube.com/watch?v=GPOv72Awo68&list=PL8dPuuaLjXtPNZwz5_o_5uirJ8gQXnhEO&index=12https://www.youtube.com/watch?v=GPOv72Awo68&list=PL8dPuuaLjXtPNZwz5_o_5uirJ8gQXnhEO&index=12 • https://www.youtube.com/watch?v=bQ-vD8TyIJY

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