Restructuring Household Finances to Prepare for Home Ownership: A Class Exercise

Abstract

The purpose of this paper is to demonstrate an interactive pedagogical case study in which college students are required to examine their potential for home ownership after graduation given their own current and anticipated household financial condition. In Part One of this paper, the basic requirements and nomenclature of the home loan process are presented. Part Two shows how lenders typically employ the front ratio and back ratio as part of the loan approval process. Part Three expands the analysis by presenting a planning worksheet example and survey by which college students may apply these principles to their own household finances in order to prepare for eventual home ownership. The form is designed to be a data collection device. Part Four concludes with suggestions for future research.