Lesson Plan Template: Model Eliciting Activity (MEA)
Formative assessment questions to assess students' prior knowledge: These questions should be asked in combination with the comprehension/readiness questions after the data set 1 is presented to the students.
- Does a higher interest rate mean a higher monthly mortgage? Why?
- What does an increase in the down payment percent mean? How does that affect the closing costs?
- How does buying points affect your closing costs?
- What are another factors than can increase your closing costs?
- How does a seller contribution will affect your closing costs?
Formative assessment questions to assess students' understanding: These questions should be asked in combination with the comprehension/readiness questions after the data set 1 is presented to the students.
- What would be the ideal mortgage loan?
- What is more important for you, a lower interest or a lower out-of -pocket expense? Why?
- Does a lower interest justify a higher out of pocket expense at closing? Why?
Feedback to Students
Feedback will be provided throughout the lesson. However, it is highly recommended to answer your students' questions with effective scaffolding questions that can encourage students' critical thinking. Make sure students are using their logical reasoning and applying their number sense skills appropriately. Listen carefully to their suggestions for students tend to use short cuts that sometimes are not justified mathematically.
Examples of feedback questions to re-direct students' reasoning:
- For you, what is the more important information you have in the table? Answers may vary. For some would be the interest rates while for another would be the down payment. Let them decide.
- Do you have enough information to make a decision? How can you find it? Answers may vary. Some students can answer that they need to know the closing cost to balance their alternatives and make their choice.
- How can you organize your work? We can use a table.
- After you have created your table and filled it with information, what are the aspects you are going to compare? Answers may vary. Closing cost, money left after closing, monthly mortgage payment
- What else should you consider before making a final decision? Answers may vary. Students can say that they need to know the monthly mortgage payment, when the adjusted rate is going to change and how, the amount of money left after paying closing costs, the frequency the interest will go up or down in the adjusted rate.
A rubric will be used for assessing the written report.
Rubric for written report: Rubric
Students will be able to:
- Create a model to solve a real world problems and test its application in a different situation.
- Write a persuasive paper using facts and opinions.
- Appropriately choose a level of accuracy.
- Efficiently make calculations involved with mortgage and interest payments.
Students should know:
- How closing costs are calculated.
- What is the relationship between interest rates and monthly payments.
- How to compare and contrast different options.
- What are the out-of-pocket expenses that affect closing costs.
- How to work with Microsoft Word and Excel.
- Introduce the activity by reading the supplemental reading.
- Use the text dependent questions to check students' understanding of the topic.
- Divide the class in groups of three (arrange the groups taking into account students' strengths and weakness as well as any data collected from the school district) and pass around the first letter.
- Analyze the first letter together with your students (teachers can read it or choose a student to read it) using the readiness questions to make sure students understand the assignment.
- Present the data set 1 and give students time to think about the best option. Let them brainstorm within their team and analyze which factors are most important. Feedback questions can be used during this part of the lesson. Also, it is highly recommended to pass around worksheet 1 to keep the work organized.
- After they have finished, discuss the possible choices. Students can go to the board and explain how they arrive to their decisions.
- Use the spreadsheet attached to show them the calculations for all different loans.
- Tell them to write the report with their decisions based on the information displayed on the board, including the process used to make their decisions.
- Introduce the second letter (twist) and check understanding by using the readiness questions.
- Let students work by themselves at this time, and minimize the teacher's intervention. They can use the computer for help with calculations and to type their reports. Teachers can allow students to use the spread-worksheet shown before, so computations will be done faster. At this time, let them fill worksheet 2.
- Collect the response to the first and second letter together with worksheets 1 and 2. Make sure students have written their names and team number. Teachers can use this as a summative assessment.
Worksheet 1: Shopping for a Home Mortgage Loan.docx
Worksheet 2: Shopping for a Home Mortgage Loan.docx
Spreadworksheet: Shopping for a Home Mortgage Loan.xlsx
Title: "Looking for the Best Mortgage: Shop, Compare, Negotiate"
Summary: This brochure is a reference guide for first buyers looking for the right mortgage. Potential buyers are given tips, advice, and recommendations so that they can avoid mistakes that can cost them unnecessary out-of-pocket expenses. (Teachers may want to provide students with particular sections of this guide only, to limit the time taken to complete this lesson.)
Link to text: https://www.hud.gov/sites/documents/BOOKLET.PDF
Text dependent questions:
- What are the factors to take into account when buying a mortgage loan?
- What is the difference between a fixed and an adjusted mortgage?
- What is the advantage of buying an FHA mortgage?
- What does the word negotiate mean?
- Why do you think that?
- How do you know if you have an answer to the problem?
- Would your solution work in a different situation?
- What are the most important things to consider in your procedure?
- What are the strengths and weaknesses of each?
- Do you agree or disagree with your classmates' ideas? Why or why not?
Reading Passage 1
Letter One. Shopping for a Home Mortgage Loan.docx
Dear Mr. Smith:
I am requesting your help in finding the mortgage loan that meets my needs. My ignorance in this matter leaves me unable to make a proper decision. Two weeks ago, I went shopping for a mortgage. To my surprise, only three banks were willing to pre-approve me for a loan. Each bank has its own guidelines for lending money, and they are very complicated. Also, requirements to qualify for a loan can vary from one bank to another. I do not know what the best mortgage option is.
I have saved around $25,000 for the down payment and closing costs. However, I would not like to put the money entirely in the house's acquisition. It would be very convenient to have some money left for decorating and furnishing my new home. In addition, I put a contract on a house that is worth $249,799, and the current owner told that she will contribute $3,000 toward the closing costs. Finally, I would like you to know that a monthly payment larger than $1,500 is too risky for me and could damage my financial situation in the future. As you can see, there are too many factors to take into consideration when choosing the right mortgage. That is why your cooperation would be greatly appreciated.
After arriving at your decision, write me back a report showing the following information:
- The bank from which I should buy the mortgage
- The program (conforming vs. FHA) you think is best for me
- The type of mortgage (fixed vs. adjusted)
- An estimate of my monthly mortgage payment (property real estate taxes=$3,850 and homeowner insurance=$4,075.25)
In addition, include in your report the steps that you follow to solve this problem. Remember to be organized when writing your report because I would like to keep the letter as a reference for future investments. Thank you for your cooperation.
- Why is Mrs. Wallance looking for assistance? (She needs help in determining the correct loan for her.)
- Who is playing the role of financial adviser in this situation? (Student teams.)
- What do you need to do? (Choose the bank, program, and type of mortgage. Also include an estimate of monthly payment and the steps used to come to these conclusions.)
- What additional information will you need to further assist Mrs. Wallance? How can you gather all that information? (Data provided in the data tables.)
- How are you going to communicate your decision to Mrs. Wallance? (In a response letter.)
Data Set 1
Data set 1. Shopping for a Home Mortgage Loan.docx
- As a financial adviser, do you have enough information to solve the problem? Explain. (Yes.)
- What is the most important factor to take into account when shopping for a mortgage? (This will vary by group.)
- Has the supplemental article helped you reach a solution? How? (This will vary by group.)
- Can you think of any other factor worthy to analyze that is not include in the table? (This will vary by group. Most likely yes.)
- Would you make a proper decision without performing any calculation? Why? (No.)
Reading Passage 2
Letter Two. Shopping for a Home Mortgage Loan.docx
Dear Mr. Smith:
Your report was excellent and I was able to understand everything. Nonetheless, today, I decided to take a look at the information I had gathered from the different banks and I realized that the brokerage fee were not included in the data. Immediately, I started making the pertinent calls, so you can find the missing information attached to this email. Also, Mel and Mel Financial is offering me a reduction of 0.5% off the brokerage fees if I buy a point to reduce the interest. Buying a point will cost me 1% of the loan amount due at closing, and it will reduce the interest rate by 1/4. I would like to know if that is a good alternative. I would really appreciate your assistance in this matter because right now I am very confused. A report like the one you sent me before will be ideal for balancing my options. I apologize for the inconvenience.
Data Set 2
Data set 2. Shopping for a Home Mortgage Loan.doc
Reflection question 2