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Vanlalzoni V.

Keightley

Keightley 1

Math 1030, Project 1


Instructor: Robert Thorn
October 12, 2015
Buying a House
Observation and Reflection.
I have searched internet websites about general homes for sale in the market for
this project. I came to understand how complicated and costly trying to buy a house is.
To do this you have to think how much you can afford for your down payment, the
monthly payments you will have to make, and decide what type of loan to get for how
many years, let say 15 years or 30 years. I never actually looked into borrowing money
from a bank before, and I came to realize how much interest I'd have to be paying for
15 or 30 years after buying a house. This can be a real burden in life for those who
have to borrow for their house payment from the bank. If they can't make their monthly
payments then they'll lose their house. I think it is better to save money and live simply,
then when you are able to make a really big down payment you should consider buying a
house.
1. The 15 year mortgage payment compared to 30 year mortgage payment:
Total = $ 283,220.44 to $ 387,332.07. The 15 year contributes a higher percentage of the
monthly payment of $ 1,573.45 towards the principal as compared to the 30 year monthly
payment of $ 1,075.92.
2. The 15 year mortgage interest compared to the 30 year mortgage interest:
$ 61,220.44 to $ 165,332.07. For 15 year mortgage, the principal paid is greater than the

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interest paid at payment number 1. For a 30 year mortgage it happens much later at
payment number 160.
3. The 15 year mortgage compared to the 30 year mortgage with an extra
payment: $ 61,220.44 to $ 136,728.96. The Bank interest rate for a 30 year loan is 0.75%
higher than the 15 year loan. The interest paid for 30 year loan is $ 104,111.63 higher
than the 15 year loan, that amounts to 170% more than 15 year interest.
4. The 15 year mortgage compared to the 30 year mortgage with a large enough
extra payments to save 15 years and have the loan paid off in 15 years: With the extra
payment of $100 a month, you still pay interest of $ 136,728.96 which is
still higher than 15 year interest.
PMT = P x (APR)
= $ 222,000 x 0.04125
n
12
__________________
______________________
- ny]
[1-(1+ APR)
n

- 12 x 15]
[1-(1+ 0.04125)
12

= 763.125____ = 1656.048027 = $ 1, 656.05 (Monthly payment)


- 0.460810911
$ 1, 656.05 x 15 years x 12 months = $ 298,088.65 (Total payment)
$ 298,088.65 - $ 22,000 = $ 76,088.65 (Interest paid)
$ 1656.05 - $ 1075.92 = $ 580.13 (this amount extra monthly payment to 30
years, loan will pay off in 15 years).

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The other factors that must be considered when buying a mortgage are:
Credit score, property tax, home owner insurance, fixed mortgage rate vs. adjustable
mortgage rate, tax benefits, finding a lender that can offer a mortgage loan with the right
terms, the rate and features which you are looking for, the funds available for closing
costs. Others things to consider when buying a home are location, travel time to work,
schools for the kids, church, recreation centers for activities, the safe environment of the
neighborhood and HOA fees, as well as future home repairs.