Housing 30: Module 8: Making a Housing Purchase (Optional)

Module 8: Making a Housing Purchase (Optional)

Suggested Time: 5-10 hours

Foundational Objectives

To become aware of the processes involved in purchasing accommodation.
To become aware of career and employment opportunities related to the field of housing.
To develop independent decision-making skills related to housing choices.

Common Essential Learnings Foundational Objectives

To become familiar with the process and responsibilities of buying and owning real estate. (NUM)
To foster independent decision-making skills related to housing as one moves through the life cycle. (IL)
To be aware of the careers and opportunities in the field of housing that exist in Saskatchewan and other provinces. (IL, CCT)

Learning Objectives

To list considerations prior to making a housing purchase . (CCT, IL, NUM )

Notes

List factors to consider before making a home purchase such as: price range, outstanding debts or savings, choice of new or older home, and resale value.

Students may interview a home owner, realtor, or a home appraiser to make a list of the factors that would affect the resale value of an existing home. Explain how each factor would impact on the resale value of the home. Consider location, zoning taxes and assessments, improvements, surrounding neighborhood, etc.

In groups, have the students create a list of the advantages and disadvantages of purchasing a new or an older home. Students may debate the topic of purchasing a new home vs. an older home.

To determine the cost of housing as it relates to an individual’s monthly income. (NUM, CCT )

Define gross debt service ratio (GDS) and pre-approved mortgages. Explain how to calculate the gross debt service ratio. Ask students to list the advantages of calculating GDS and obtaining a pre-approved mortgage prior to looking for a home on the real estate market. Some advantages include enabling the potential buyer to examine houses within higher price range and allowing a buyer to estimate the expected monthly mortgage payments and other expenses. Real estate agents and financial institutions can help potential buyers determine GDS.

To investigate available housing within a community. (IL)

List housing types for sale within the community. Housing such as single family dwellings, existing and new homes, duplexes, vacation sites, condominiums, townhouses, modular houses, and mobile homes may be included.

From newspaper ads, students may select examples for each of the buying choices in housing. Discuss the advantages and disadvantages of the various types of housing.

Compare condominiums to time share units.

To explore the cost of housing.

List the housing types available to consumers today. Examples such as apartments, townhouses, modular houses, mobile homes, bungalows, bi-levels, condos, duplexes, apartments, etc. will appear on the list.

Using the case study in Learning Objective 7.2, ask the students to identify housing the family could buy. Have them give reasons for their choice considering the family’s needs, family size, occupation, and monthly income. Students may use multiple listing services (website) to determine the availability and costs of homes in their area.

To explore a career in real estate and the role of the real estate agent. (Optional)

Define the term real estate.

If possible, invite a real estate agent to the class to speak about a career in real estate. The presentation should include the following information:

what qualities an individual must possess to become a real estate agent (employability skills)
what it takes to be a successful real estate agent
trends within real estate
the benefits and drawbacks of the job
length of education and training
cost of education
hours of work
employment opportunities
certification
upgrading
how to become associated with an established company.

Ask the agent to explain the role of the real estate agent in assisting the potential buyer in making a housing purchase.

Discuss "for sale by owner" and why home owners choose to sell their homes in this way.

To create a list that a prospective home buyer may use to evaluate a prospective home for purchase. (CCT, IL, PVSV, NUM)

Have students brainstorm an initial list.

Outline the phases involved in the purchase of a real estate property including:

getting pre-approval of a mortgage (based on gross debt standard per total debt standard)
selecting a realtor
viewing homes on the market
having the home inspected
making an offer/counter offer
signing an agreement of sale
making a deposit
setting/removing conditions (mortgage approval, home inspection, surveyors certificate, furnace inspection, gas line inspection, etc.)
obtaining financing before the agreement of sale
hiring a lawyer
making a down payment
doing a title search
securing a mortgage before the agreement of sale
closing the deal
registering the property
paying taxes
agreeing to a possession date.

To develop an understanding of the terms related to obtaining financing for a home purchase. (NUM)

Define the real estate terms involved in the purchase of a home: mortgage, down payment, closing costs. Make a list of the closing costs involved in a real estate purchase.

Discuss first mortgage and second mortgage and why and when they are used.

Refer to the case study in Learning Objectives 8.4 and calculate the cost of covering the list in 8.6 for the chosen family.

Given a case study that includes an occupation, monthly salary, and family size, ask students to calculate the GDS ratio and select a home that the family can afford. Consider costs such as legal fees, title search, taxes, and other monthly expenses.

To examine the role of a lawyer in the purchase of a home.

Invite a lawyer to the class to discuss the role of a lawyer in closing a deal for a real estate purchase. Such topics as down payment, lawyer’s fee, appraisal fee, title search, insurance premium, lien, survey fee, realtor’s fee, building information abstract and prepaid taxes should be explained in the presentation. Examine copies of forms that deal with deed, title, loan, and mortgage.

To explore programs that help families with limited means. (PSVS)

Discuss Habitat for Humanity and sweat equity and how the two programs work to provide indirect financial assistance to a potential home owner. Invite a speaker who has been directly involved with the programs to speak about how they work, who is involved in the programs, and who is eligible to use the programs. Suggested speakers may include someone who has had his/her home built through the program, a builder, or someone involved directly in the program organization. If it is not possible to obtain a speaker, ask the students to collect newspaper clippings, interview someone involved in the program, or watch for news reports about the program. Consider using Internet sites for additional sources of information.

Students may investigate Habitat for Humanity on their own, design a poster advertising habitat for Humanity, or act out a TV interview on the topic. Students are encouraged to use websites for research of topics wherever possible.

To investigate the initial and continuing costs of owning housing property.

Ask the students to work in groups to brainstorm ideas and list the continuing costs of home ownership. Use the list from the previous exercise and identify which of the costs are continuing costs. Include items such as mortgage payments, property taxes, fire insurance premium, immediate repairs, utilities, local improvements, condo fees (if applicable), repairs, tools and equipment for yard maintenance, replacement of appliances, furniture, and draperies.

To identify the institutions that finance mortgages and those that regulate housing standards.

Have students list financial institutions in the area that offer mortgages. Include banks, credit unions, trust companies, and federal and provincial government programs.

Examine the role of Canada Mortgage and Housing Corporation and other government agencies. Review the National Housing Act.
Explain how to read mortgage tables.

To identify the procedure to obtain a mortgage. (IL)

Define mortgage and explain the significance of the meaning of the word mortgage. List the various kinds of mortgages available to home buyers today.

To understand the importance of having home insurance.

Ask the students to list the benefits of having home insurance. Determine when to purchase home insurance and how often it must be renewed. Discuss the importance of having home insurance upon the possession date of a home.

Discuss insurance coverage for:

building insurance

fire insurance

property

liability

flood

act of God

Explore the types of coverage that may be purchased with insurance.

Ask the students to create a list of types of insurance coverage. Include fire, lightning, explosion, wind, tornado, hail, smoke, liability, theft, vandalism, riot, and water on the list.

To determine sources of insurance information.

Create a list of information sources for household insurance.

Explain the procedure for selecting an insurance agent.

To create an awareness of the language related to insurance. (COM)

Define the following terms related to insurance purchases: coverage, policy, dwelling, contents, liability, replacement value, and premium.