Math 1030

Name: Savhannah Carpenter

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 180,000.

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

The down payment is 36,000. The amount of the mortgage is 144,000.

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: 3.2%. Rate for 30-year mortgage 4%.

Name of second lending institution:Wells Fargo

Rate for 15-year mortgage:3.6%. Rate for 30-year mortgage 4.2%.

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:$1012. 30-year monthly payment $687.

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 schedule 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. . 1012 384 628 143,372

2. . 1012 382.33 629.67 142,742.33

50. . 1012 296.46 715.54 110,458.22

90. . 1012 216.03 795.97 80,216.48

120. . 1012 194.83 862.17 55324.54

150. . 1012 78.12 933.88 28,362.31

 180. . 169.56 .45 169.11 $0.00. .

total ------- 181.317.56 37,317.56 144,000 ---------

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

The total principal paid is the same as the mortgage.
The total amount paid is the number of payments times the monthly payment.
The total interest paid is the total amount paid minus total principal paid.

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 $106,682.44 less than the mortgage.

The total amount of interest is 74.09% (more or less) than the mortgage.

The total amount of interest is 25.91% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)

1. . 687 480 207 143,793

2. . 687 479.31 207.69 143,585.31

60. . 687 435.09 251.91 130,276.14

 120. . 687 379.42 307.58 113,519.34

240. . 687 228.45 458.55 68,077.77

300. . 687 127.12 559.88 37,575.32

360. . 687 3.39 1015.59 $0.00. .

total ------- 247,651.98 103,651.98 144,000 ---------

Payment number 240 is the first one in which the principal paid is greater than the interest
paid.
The total amount of interest is $40,349 less than the mortgage.

The total amount of interest is 28.02% less than the mortgage.

The total amount of interest is 71.98% 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
$70,246.91.

The total amount of interest paid with the $100 monthly extra payment would be
$33,405.07 less than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
68% less than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 24 years and
6 months; thats 69 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, (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.
Your submission must be in pdf format. Refer to the assignment rubric to see how you'll be
graded.

I learned from this lesson that it is better to pay more in a shorter period of time when
dealing with loans of any interest rate. For example, when using a 15 year loan, I would be
paying 325 dollars more per month than on a thirty year loan, but I would save $66,334.42 just
by paying off the loan in half the time. Or, by adding on an additional hundred dollars a month to
the flat monthly payment, I would save $33,405.07 just by paying a bit extra. I would absolutely
say that coughing up an extra 100 dollars on a monthly basis is worth saving the 33,405.07
within just a matter of years. However, one would need to be sure that they can afford not only
the monthly payments but also the extra payment each month to ensure they do not pull
necessary funds from other places, such as retirement or education plans. Additionally, it is
incredibly important to ensure the home you are taking a mortgage out on is one that you
actually enjoy living in, as a mortgage is undeniably a huge and longtime commitment.