Math 1030

Name: Christina Boyd, Ashlie Larsen, Austin Lay.

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 _$267,000___________.

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

The down payment is __$53,400___. The amount of the mortgage is _$213,600.00_.

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: __America First Credit Union

Rate for 15-year mortgage: __3.875%__. Rate for 30-year mortgage ___4.375%__.

Name of second lending institution: ___Wells Fargo_______.

Rate for 15-year mortgage: _4.125%. Rate for 30-year mortgage ___4.50%_.

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: $1566.63__30-year monthly payment _1066.47_.

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 are many programs online available for this including Brett Whissle’s website:
http://bretwhissel.net/cgi-bin/amortize.
https://www.zillow.com/homes/for_sale/Taylorsville-UT-84129/12829092_zpid/422745_rid/glo
balrelevanceex_sort/40.735031,-111.868973,40.595185,-112.103463_rect/11_zm/
https://www.americafirst.com/loans/mortgage-loans/mortgage-loans.html

https://www.wellsfargo.com/mortgage/rates?dm=DMIACB0G50&gclid=COnfru_m0dkCFWmY
xQIda_4JAw&gclsrc=ds&dclid=CNjAtO_m0dkCFVHdwAodqUYJsA

http://bretwhissel.net/cgi-bin/amortize

It’s 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. . 04/01/2018 $1,566.63 $689.75 $876.88 $212,723.12
2. 05/01/2018 $1,566.63 $686.92 $879.71 $211,843.41
50. . 05/01/2022 $1,566.63 $539.68 $1026.94 $166,101.25
90. . 09/01/2025 $1,566.63 $398.33 $1,168.29 $122,186.57
120. . 09/01/2030 $1,566.63 $279.69 $1,286.93 $85,327.48
150. . 09/01/2030 $1,566.63 $149.00 $1,417.62 $44,725.33
180. . 03/01/2033 $1,561.58 $5.04 $1,556.54 $0.00
total - - - - - - - $281,992.83 $68,392.83 $213,600.00 $0.00
Use the proper word or phrase to fill in the blanks.

The total amount paid is the number of payments times _The number of payment amount
The total interest paid is the total amount paid minus principal

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 $68,392.83 FOR THE 15 YEARS than the mortgage.

The total amount of interest is 0.320191 = 32.0191% (more or less) than the mortgage.

The total amount of interest is 0.679808 = 67.9808% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/01/2018 $1,066.47 $778.78 $287.72 $213,312.28
2. . 05/01/2018 $1,066.47 $777.70 $288.77 $213,023.50
60. . 03/01/2023 $1,066.47 $709.84 $356.63 $194,341.93
120. . 03/01/2028 $1,066.47 $622.81 $443.66 $170,384.40
240. . 03/01/2038 $1,066.47 $379.86 $686.81 $103,504.01
300. . 03/01/2043 $1,066.47 $212.31 $854.16 $ 57,379.74
360. . 03/01/2048 $1,062.60 $3.87 $1058.73 $0.00 .
total $383,930.39 $170,330.39 $213,600.00 - - -$0 - - - - - -

Payment number ___171__ is the first one in which the principal paid is greater than the interest
paid.
 The total amount of interest is $_1.81 (less) than the mortgage.

The total amount of interest is 0.202573 = 20.2573% (more or less) than the mortgage.

The total amount of interest is .797427 = 79.7427 % of the mortgage.

Consider the 30-year mortgage again and suppose you paid an additional $100 a month towards
the principal [If you are making extra payments towards the principal, include it in the monthly
payment and leave the number of payments box blank.]

The total amount of interest paid with the $100 monthly extra payment would be
$139,447.51

The total amount of interest paid with the $100 monthly extra payment would be
$30,882.88 less than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 25years and 3
months; that’s 57 months sooner than paying only the scheduled payments.
Summarize what you have done and learned on this project in a well written and typed paragraph
of at least 100 words (half page). Because this is a math project, you must compute and compare
numbers, both absolute and relative values. 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

Also, keep in mind that the numbers don’t explain everything. Comment on other factors that
must be considered with the numbers when making a mortgage.

When buying a house, it is important to look at the different factors between a fifteen-year
mortgage and a thirty-year mortgage. When looking at the payments there is more burden
monthly to go with the fifteen-year which is $1,566.63 rather than the thirty-year which has a
monthly payment of $1,066.47.

The advantage of the fifteen-year mortgage is you only have a payment for half of the time
which in the end saves money from the interest. The fifteen-year mortgage has a total interest
amount that will be paid which is $68,392.83. The thirty-year mortgage has a total interest
amount that will be paid which is $170,330.39. The total savings by going with the
fifteen-year mortgage verse the thirty-year is $101,937.55.

If we choose to make an extra payment of a $100 for the thirty-year mortgage this will
decrease the amount of payments by twenty-one and a half months, instead of thirty-years,
the mortgage would be paid off 57 months sooner.

In the end if I choose to make the extra payment I would still be paying $71,054.68 more
interests if I choose this plan over the fifteen-year mortgage. All in all the while the
fifteen-year mortgage may have a bigger monthly payment, in the long run it is going to save
you the most money even if you decided to make the extra payments on the thirty-year
mortgage.