Check out the new student guide to use with this lesson!
What many new homeowners don’t know is that a mortgage is a whole lot more than a house payment. While owning a home can bring many assets, it comes with liabilities as well. A house payment is only for those who understand and know the responsibilities, financial and otherwise, that come with it. Many believe that the American Dream is to own a home. It is for over 50% of the American population, but many millennials have made the shift to renting. Home ownership much more complicated than making that monthly mortgage payment.
What do you know about owning a home? What do you know about renting? Think of some advantages to owning your home. Make a list of positives and negatives that come with homeownership. Different people find different reasons to support getting in debt to achieve the American mortgage. Put a star by the two most advantageous to suit your personality. Mark a star next to the two most disadvantageous that make you wary of signing your name on a mortgage contract.
Consumers need to be educated about any product that they want to purchase and what responsibilities are involved. Where can you look to find information about mortgages? What about the responsibilities of homeownership? Does the government want you to be a homeowner or a renter? Are there differences with insurance if you are a renter compared to an owner? When you read through the article 3 Things Change, write down what a potential homeowner needs to be aware of when opting to buy rather than rent.
What trends do you notice the article suggests “take over” the mind of a homeowner? Compare your list with the article. What can you add? Talk with a partner on how your lists compare.
Together as partners, create a “Thoughts for a Potential Home Owner” pamphlet. Come up with three different types of people, identifying them based on: income, personality, habits and goals. Draw or make an avatar replica of each imaginary person and come up with a short bio for each one. Identify your three personalities as “renter,” “home owner” and “on the fence.” Write a paragraph that will help your “on the fence” decision maker come to a conclusion. Be sure to list multiple advantages and disadvantages to both owning a home and renting. Then compile a list of eight things to consider about homeownership, whereby you demonstrate that you understand how owning a home affects other areas of your life. Present your pamphlet, personalities, biographies, and thoughts to consider. Let the rest of your class decide what your “on the fence” personality will do based upon the content you share and what you have learned as a class.
Extension: Find a property online to rent, and one to buy. Create a plan for your Owner Avatar and your Renter Avatar. Describe the rental and buying process and what decisions are applicable for each home.
Financial Literacy Standards
SS.912.FL.2.1: Compare consumer decisions as they are influenced by the price of a good or service, the price of alternatives, and the consumer’s income as well as his or her preferences.
SS.912.FL.2.2: Analyze situations in which when people consume goods and services, their consumption can have positive and negative effects on others.
SS.912.FL.2.3: Discuss that when buying a good, consumers may consider various aspects of the product including the product’s features. Explain why for goods that last for a longer period of time, the consumer should consider the product’s durability and maintenance costs.
SS.912.FL.5.2: Explain how the expenses of buying, selling, and holding financial assets decrease the rate of return from an investment.
SS.912.FL.6.4 Explain that people may be required by governments or by certain types of contracts (e.g., home mortgages) to purchase some types of insurance.
SS.912.FL.1.7 Discuss how peoples sources of income, amount of income, as well as the amount and type of spending affect the types and amounts of taxes paid.
Deborah Kozdras, Ph.D.