Standard 3 : Loans and Financing (Archived)



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Become familiar with and describe the advantages and disadvantages of short-term purchases, long-term purchases, and mortgages.

General Information

Number: MA.912.F.3
Title: Loans and Financing
Type: Standard
Subject: X-Mathematics (former standards - 2008) - Archived
Grade: 912
Body of Knowledge: Financial Literacy

Related Benchmarks

This cluster includes the following benchmarks
Code Description
MA.912.F.3.1: Compare the advantages and disadvantages of using cash versus a credit card.
MA.912.F.3.2: Analyze credit scores and reports.
MA.912.F.3.3: Calculate the finance charges and total amount due on a credit card bill.
MA.912.F.3.4: Compare the advantages and disadvantages of deferred payments.
MA.912.F.3.5: Calculate deferred payments.
MA.912.F.3.6: Calculate total cost of purchasing consumer durables over time given different down payments, financing options, and fees.
MA.912.F.3.7: Calculate the following fees associated with a mortgage:
  • discount points 
  • origination fee 
  • maximum brokerage fee on a net or gross loan 
  • documentary stamps 
  • prorated expenses (interest, county and/or city property taxes, and mortgage on an assumed mortgage)
MA.912.F.3.8: Substitute to solve a variety of mortgage formulas, including but not limited to Front End Ratio, Total Debt-to-Income Ratio, Loan-to-Value Ratio (LTV), Combined Loan-to-Value Ratio (CLTV), and Amount of Interest Paid Over the Life of a Loan.
MA.912.F.3.9: Calculate the total amount to be paid over the life of a fixed rate loan.
MA.912.F.3.10: Calculate the effects on the monthly payment in the change of interest rate based on an adjustable rate mortgage.
MA.912.F.3.11: Calculate the final pay out amount for a balloon mortgage.
MA.912.F.3.12: Compare the cost of paying a higher interest rate and lower points versus a lower interest rate and more points.
MA.912.F.3.13: Calculate the total amount paid for the life of a loan for a house including the down payment, points, fees, and interest.
MA.912.F.3.14: Compare the total cost for a set purchase price using a fixed rate, adjustable rate, and a balloon mortgage.
MA.912.F.3.15: Interpret the legal description using the metes and bounds; lot and block (plat); government survey; and monument methods.
MA.912.F.3.16: Estimate real property value using the sales comparison approach, cost-depreciation approach, or the income capitalization approach.
MA.912.F.3.17: Compare interest rate calculations and annual percentage rate calculations to distinguish between the two rates.


Related Access Points

This cluster includes the following access points.

Independent

Access Point Number Access Point Title
MA.912.F.3.In.a: Identify wise consumer strategies for cash purchases, such as counting change, rounding up, and adding the tax.
MA.912.F.3.In.b: Identify advantages and disadvantages of using alternate forms for payment, such as checks, gift cards, debit cards, and credit cards.
MA.912.F.3.In.c: Identify finance charges as extra amounts added to cost of items that are not paid for on time.
MA.912.F.3.In.d: Recognize that deferred payments result in extra charges, such as increased interest rates.
MA.912.F.3.In.e: Identify reasons for paying bills on time and the effects of late payments or nonpayment.
MA.912.F.3.In.f: Identify resources and strategies for purchasing costly items, such as a car and a house.

Supported

Access Point Number Access Point Title
MA.912.F.3.Su.a: Use wise consumer strategies for paying with cash, such as rounding to the next dollar.
MA.912.F.3.Su.b: Identify examples of alternate forms of payment, including debit cards, checks, gift cards, and credit cards.
MA.912.F.3.Su.c: Identify the effects of not paying bills on time.

Participatory

Access Point Number Access Point Title
MA.912.F.3.Pa.a: Recognize that a predetermined amount of money can be used to pay for an item in common purchasing situations.


Related Resources

Vetted resources educators can use to teach the concepts and skills in this topic.

Lesson Plan

Name Description
Shopping for a Home Mortgage Loan:

Students will analyze the data given to decide which type of loan they will buy. After selecting their options, students will estimate the first loan payment. FHA loans offer a better interest rate than conforming loans, but buying premium insurance is a requirement to qualify for an FHA loan, increasing the upfront cost of the loan. Fixed interest rate loans seem like the best choice because you have the same mortgage payment every month; however, adjustable rate loans offer a better interest rate and it has a cap on the interest rate.

Model Eliciting Activities, MEAs, are open-ended, interdisciplinary problem-solving activities that are meant to reveal students’ thinking about the concepts embedded in realistic situations. Click here to learn more about MEAs and how they can transform your classroom.

Video/Audio/Animation

Name Description
Introduction to Dangers of Using Credit:

This episode of Warren Buffet's Secret Millionaire's Club (4 minutes) introduces the dangers of using credit and only making the minimum monthly payment.



Student Resources

Vetted resources students can use to learn the concepts and skills in this topic.

Video/Audio/Animation

Title Description
Introduction to Dangers of Using Credit:

This episode of Warren Buffet's Secret Millionaire's Club (4 minutes) introduces the dangers of using credit and only making the minimum monthly payment.