Math 1030

Name _______Haley Nate____________

Buying a House

Select a house from a real estate booklet, newspaper, or website. Find something reasonable
between $100,000 and $350,000. In reality, a trained financial professional can help you
determine what is reasonable for your financial situation. Take a screen shot of the listing for
your chosen house and attach it to this project. Assume that you will pay the asking price for
your house.

The listed selling price is ____$194,900_____.

Assume that you will make a down payment of 20%.

The down payment is ___$38,980__. The amount of the mortgage is _$155,920__.

Ask at least two lending institutions for the interest rate for both a 15-year and a 30-year fixed
rate mortgage with no points or other variations on the interest rate for the loan.

Name of first lending institution: ______lendingtree.com_________.

Rate for 15-year mortgage: __3.13%___. Rate for 30-year mortgage ___3.92%___.

Name of second lending institution: __mortgage.amerivalue.com_____.

Rate for 15-year mortgage: __2.25%____. Rate for 30-year mortgage __3.93%____.

Assuming that the rates are the only difference between the different lending institutions, find the
monthly payment at the better interest rate for each type of mortgage.

15-year monthly payment: __$1,021.41__. 30-year monthly payment _$737.21___.

These payments cover only the interest and the principal on the loan. They do not cover the
insurance or taxes.

To organize the information for the amortization of the loan, construct a schedule that keeps
track of: (1) the payment number and/or (2) the month and year (3) the amount of the payment,
(4) the amount of interest paid, (5) the amount of principal paid, and (6) the remaining balance.
There is a Loan Amortization sschedule in CANVAS.

Its not necessary to show all of the payments in the tables below. Only fill in the payments in
the following schedules. Answer the questions after each table.
15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/2017 $1,021.41 $292.35 $729.06 $155,190.94
2. . 5/2017 SAME $290.98 $730.43 $154,460.51
50. . 5/2021 SAME $222.26 $799.15 $117,741.08
90. . 10/2024 SAME $160.08 $861.33 $84,516.01
120. . 4/2027 SAME $110.29 $911.12 $57,911.43
150. . 10/2029 SAME $57.62 $963.79 $29,768.93
180. . 4/2032 $1,021.02 $1.91 $1,019.50 $0.00. .
total ------- $218,443.42 $62,523.42 $155,920 ---------

Use the proper word or phrase to fill in the blanks.

The total principal paid is the same as the _cost of the mortgage after down payment__.
The total amount paid is the number of payments times _the price of payments ______.
The total interest paid is the total amount paid minus __the principal/mortgage______.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number __1__ is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $93,397.58 (more or less) than the mortgage.

The total amount of interest is 1.6694% (more or less) than the mortgage.

The total amount of interest is 2.4937% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/2017 $737.21 $509.34 $227.87 $155,692.13
2. . 5/2017 SAME $508.59 $228.62 $155,463.51
60. . 4/2022 SAME $460.99 $276.22 $140,842.96
120. . 4/2027 SAME $401.29 $335.92 $122,507.15
240. . 4/2037 SAME $240.38 $496.83 $73,089.83
300. . 4/2042 SAME $133.00 $604.21 $40,110.01
360. . 4/2047 $739.19 $2.41 $734.80 $0.00. .
total ------- $265,395.60 $109,475.60 $155,920 ---------

Payment number 149__ is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $46,444.40 (more or less) than the mortgage.

The total amount of interest is 3.3571% (more or less) than the mortgage.

The total amount of interest is 1.4242% of the mortgage.

Suppose you paid an additional $100 a month towards the principal

The total amount of interest paid with the $100 monthly extra payment would be
$ 84,731.41.

The total amount of interest paid with the $100 monthly extra payment would be
$24,744.19 (more or less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 1.2802%
(more or less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in _12_ years and __0_
months; thats __72__ months (6 years) sooner than paying only the scheduled
payments.
Summarize what you have done and learned on this project. Because this is a math project, you
must compute and compare numbers, both absolute and relative values, that havent been
compared above. Statements such as a lot more and a lot less do not have meaning in a
Quantitative Reasoning class. Make the necessary computations and compare (1) the 15-year
mortgage payment to the 30-year mortgage payment, (2) the 15-year mortgage interest to the 30-
year mortgage interest, (3) the 15-year mortgage to the 30-year mortgage with an extra payment,
and (4) the 15-year mortgage to the 30-year mortgage with a large enough extra payments to
save 15 years and have the loan paid off in 15 years. Also, keep in mind that the numbers dont
explain everything. Comment on other factors that must be considered with the numbers when
making a mortgage.

This assignment was very helpful for a number of reasons. I desperately want to own a home one
day however, the thought of paying for 30 years is worrisome to me because obviously the
longer you have the loan the more you will end up paying in interest. On the same note, having a
shorter loan is disheartening only because you are paying so much more per month on top of
having to pay for additional fees like utilities, property taxes and insurance.

If you are looking to save money altogether, the 15 year loan is the way to go. You would end up
saving $46,952.18 with a 15 year loan, which is important if you are looking to save to retire.
But if you do not have a large enough income to supply the monthly payments for the 15 year
loan, you would be better off making smaller payments for the 30 year loan.

My favorite part about this assignment was having to figure out how paying an extra $100 per
month with the 30 year loan would impact final costs. I was pleased to see there was a fair
middle ground to have a shorter loan and cheaper payments. The other positive about choosing a
30 year loan and deciding to pay extra is that you decide how much extra you want to pay. If you
suddenly got a pay raise and can afford more, you can pay more. If you cant, you only have to
pay the required amount. Having the choice to pay more or less based on circumstance seems
more efficient than committing to a larger monthly payment.

Your submission must be in pdf format. Refer to the assignment rubric to see how you'll be
graded.