Math 1030

Name _____Joel Cox______

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 ___$349,000___.

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

The down payment is ____$58167____. The amount of the mortgage is __$290833___.

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: ___Transwest Credit Union___________.

Rate for 15-year mortgage: ___3.375%____. Rate for 30-year mortgage __4.000%___.

Name of second lending institution: ______City Creek Mortage________.

Rate for 15-year mortgage: __3.000%___. Rate for 30-year mortgage _3.750%__.

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: _$2,008.44_. 30-year monthly payment __$1,347.89__.

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. . 2,008.44 727.08 1281.36 289551
2. . 2,008.44 723.88 1284.56 288267
50. . 2,008.44 560.32 1448.12 222679
90. . 2,008.44 408.22 1600.22 161687
120. . 2,008.44 283.75 1724.69 111774
150. . 2,008.44 149.60 1858.84 57979
180. . 2,008.44 5.01 1998.42 $0.00. .
total ------- 361519.07 70686.07 290833 ---------

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

The total principal paid is the same as the ___payment minus interest____.
The total amount paid is the number of payments times ____the total payment____.
The total interest paid is the total amount paid minus __the principle 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 $__220147_ (more or less) than the mortgage.

The total amount of interest is __76__% (more or less) than the mortgage.

The total amount of interest is ___24__% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 1346.89 908.85 438.04 290394.96
2. . 1346.89 907.48 439.41 289955.55
60. . 1346.89 820.32 526.58 261974.56
120. . 1346.89 711.91 634.99 227174.82
240. . 1346.89 423.53 923.36 134606.86
300. . 1346.89 233.43 1113.46 73585.95
360. . 1346.89 4.20 1342.70 $0.00. .
total ------- 484881.47 194048.47 290833 ---------

Payment number _139_ is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $__96784.53__ (more or less) than the mortgage.

The total amount of interest is ___34___% (more or less) than the mortgage.

The total amount of interest is ___66___% 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
$__167906.74__.

The total amount of interest paid with the $100 monthly extra payment would be
$__26141.73__ (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
__13.47___% (more or less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in __26__ years and _6_
months; thats __62__ 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.

1. While paying $660.65 more every month, a 15 year mortgage would save a home
buyer over 74%
2. when compared to a 30 year mortgage, simply because the interest difference between
the two is a whopping $123362.40!
3. By paying slightly extra on a thirty year payment this would lower the difference
down to 97220.27
4. Increasing the extra payment amount to $770 would cut down the 30 year mortgage
by 50 years, but would still be inefficient compared to purchasing a 15 year mortgage
simply because the amount of interest paid would be $19065.51 greater.

This assignment shows that it is important when buying a home to decide if paying a lot
extra every month, would be worth saving a massive amount of money due to interest. It
is also very important to compare the APR between mortgages and find the best
available mortgage, as the greater the APR gets, the more money extra will be paid to
the financer.