Anthony Robertson

Math 1030
July 8, 2016
Professor McGrade

Math 1030, Project 1: Buying a House

PART 1
1. What is the career you are interested in pursuing after completing your education? (If
you are already in a career, feel free to use that.)
I am planning on pursuing Construction Management.
2. What is the expected starting salary for your career? Look at several different sites on the
Internet and include the name of these sites along with the URL. (If you would rather not
list your current income, feel free to use an average for the career)
Salary.com listed the average wage from $87,663-$101,368
http://www1.salary.com/Construction-Manager-I-salary.html
Salarybystate.com listed Utahs average at $63,000
http://www.salarybystate.org/tag/starting-salary-for-construction-managers
Work.chron.com listed the average at $93,900 per year
http://work.chron.com/average-salary-construction-project-managers-1931.html
3. What is the maximum house price you will be able to afford? You can get help with this
4. by searching on the Internet for How much house can I afford? Provide an explanation
on how you arrived at your house price.
The maximum price I could afford is $218,271. I put my annual income at $63,000 with a
10,000 down payment at 3.75 interest for a 30 year term.
5. Where is the location in which you would like to purchase a home?
Salt Lake City
6. Find a listing statement for a house that has been listed within the last 6 months and
meets your criteria for price and location. The listing should include the date when the pr
operty was listed, cost of property, and a picture. Cut and paste a description of the
home into the document. No urls here, I would like to see the home.
Darling mid-century rambler in prime east side location near schools, shopping, parks, St. Marks Hospital
and dining. The single level floor plan offers 3 bedrooms, 1 full bathroom, a large eat-in kitchen, living
room and a laundry room. The living room is complete with hardwood floors and a fireplace. Customize
this charming fixer upper and make it your own. Park in the attached carport with a storage shed. The
large backyard is fully fenced and features a gorgeous mountain view. AS IS.

Assuming that you will be making a down payment of 20% and have good financial
standing, use the internet to obtain interest rates for a 30 year loan and for a 15 year loan
from two different lenders. Include each of these interest rates, along with where they
were obtained, in your written report. Use the worksheet here as a guide.
The listed selling price is $210,000. Assume that you will make a down payment of 20%.
The down payment is $42,000
The amount of the mortgage is $168,000
Ask at least two lending institutions for the interest rate for both a 15-year and a 30-year fi
xed 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: 2.5%
Rate for 30-year mortgage: 3.4%
Name of second lending institution: Wells Fargo
Rate for 15-year mortgage: 3.8%
Rate for 30-year mortgage: 3%
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: $1160.00
30-year monthly payment: $780.00
15 year loan:
PMT
NO
1
2
50
90
120
150
180

PAYMENT
DATE
7/8/2016
8/8/2016
8/8/2020
12/8/2023
6/8/2026
12/8/2028
6/8/2031

BEGINNING
BALANCE
$168,000.00
$167,229.79
$153,879.03
$140,808.53
$129,987.74
$118,208.39
$105,385.54

SCHEDULED
PAYMENT
$1,120.21
$1,120.21
$1,120.21
$1,120.21
$1,120.21
$1,120.21
$1,120.21

TOTAL
PAYMENT
$1,120.21
$1,120.21
$745.05
$745.05
$745.05
$745.05
$745.05

PRINCIPAL
$770.21
$771.81
$309.06
$346.09
$376.75
$410.12
$446.46

INTEREST
$350.00
$348.40
$435.99
$398.96
$368.30
$334.92
$298.59

ENDING
BALANCE
$167,229.79
$166,457.98
$153,569.97
$140,462.44
$129,610.99
$117,798.26
$104,939.08

Payment number 120 is the first one in which the principal paid is greater than the
interest paid.
The total amount of interest is $96952.19 less than the mortgage.
The total amount of interest is 42% less than the mortgage.
The total amount of interest is 58% of the mortgage.
The total principal paid is the same as the difference from the original mortgage.
The total amount paid is the number of payments times the principle.
The total interest paid is the total amount paid minus the original loan cost.

CUMULATIVE
INTEREST
$350.00
$698.40
$22,822.40
$39,516.80
$51,016.81
$61,555.53
$71,047.81

30 year loan:
PMT
NO
1
2
60
120
240
300
360

PAYMENT
DATE
7/8/2016
8/8/2016
6/8/2021
6/8/2026
6/8/2036
6/8/2041
6/8/2046

BEGINNING
BALANCE
$168,000.00
$167,730.95
$150,748.75
$129,987.74
$76,231.44
$41,683.24
$742.94

SCHEDULED
PAYMENT
$745.05
$745.05
$745.05
$745.05
$745.05
$745.05
$745.05

TOTAL
PAYMENT
$745.05
$745.05
$745.05
$745.05
$745.05
$745.05
$742.94

PRINCIPAL
$269.05
$269.81
$317.93
$376.75
$529.06
$626.95
$740.84

INTEREST
$476.00
$475.24
$427.12
$368.30
$215.99
$118.10
$2.11

ENDING
BALANCE
$167,730.95
$167,461.14
$150,430.82
$129,610.99
$75,702.38
$41,056.30
$0.00

CUMULATIVE
INTEREST
$476.00
$951.24
$27,133.73
$51,016.81
$86,514.01
$96,570.84
$100,217.45

Payment number 120 is the first one in which the principal paid is greater than the
interest paid.
The total amount of interest is $67,782.55 less than the mortgage.
The total amount of interest is 60% less than the mortgage.
The total amount of interest is 40% 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:
$79,442.04
The total amount of interest paid with the $100 monthly extra payment would be
$20,775.41 less than the interest paid for the scheduled payments only.
The total amount of interest paid with the $100 monthly extra payment would be 21% less
than the interest paid for the scheduled payments only.
The $100 monthly extra payment would pay off the mortgage in 5 years and 1 month;
thats 61 months 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,
$1,120.21-$745.05=$375.16 per month
(2) The 15-year mortgage to the 30-year mortgage with an extra payment,
You would pay almost the same amount in interest in 30 years paying an extra $100 a
month as you would in 15 years.

(3) The total 15-year mortgage interest vs the total 30-year mortgage interest, and
$100,217.45-$71.047.81=$29,169.64 difference
(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.
If you pay an extra $450 a month you can pay the mortgage off 15 years sooner.
Also, you know that the numbers dont explain everything. Comment on other factors that
must be considered with the numbers when making a mortgage.
Other expenses you have in your life, a bad credit score, location of the home, and
condition of the home.
Finally, after all this work would renting be a good option? Why or why not?
If one has the money to put down on a home, or pay extra on a mortgage, then yes. Your
money is not invested in anything when leasing. It is possible to receive the money back
(if the market is good) when considering equity. However, you lose money in both
situations. Id rather own so I can do whatever I want to my house.