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Math 1030

Name: Saxxon Duncan

Part I
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 $270,000.

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

The down payment is 54,000. The amount of the mortgage is $216,000.

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: American First Credit Union.

Rate for 15-year mortgage: 3.25%. Rate for 30-year mortgage: 4.0%.

Name of second lending institution: Chase Bank.

Rate for 15-year mortgage: 3.125%. Rate for 30-year mortgage: 3.875%.

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: $1504.68. 30-year monthly payment: $1015.71.

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. . 1/1/2018 1504.68 562.50 942.18 215,051.82
2. . 2/1/2018 1504.68 560.05 944.63 214,113.19
50. . 12/1/2022 1504.68 434.44 1070.23 165,756.39
90. . 1/1/2024 1504.68 368.47 1136.20 140,356.94
120. . 12/1/2027 1504.68 220.74 1283.94 83,480.46
150. . 6/1/2030 1504.68 116.55 1388.12 43,367.76
180. . 12/1/2032 1504.68 3.91 1496.86 $0.00. .
total ------- 270,837.80 58,841.71 215,996.09 ---------

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


The total principal paid is the same as the Total Amount Paid minus the Total Intrest.
The total amount paid is the number of payments times 180.
The total interest paid is the total amount paid minus 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 $54,841.71 (more) than the mortgage.

The total amount of interest is 74.6% (less) than the mortgage.

The total amount of interest is 25.4% of the mortgage.


30-year mortgage

Payment Payment Payment Interest Principal Remaining


Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 1/1/2018 1015.71 697.50 318.21 215,681.79
2. . 2/1/2018 1015.71 696.47 319.24 215,362.55
60. . 12/1/2022 1015.71 630.83 384.88 194,969.53
120. . 12/1/2027 1015.71 548.69 467.02 169,450.85
240. . 12/1/2037 1015.71 328.09 687.63 100,913.13
300. . 12/1/2042 1015.71 181.34 834.38 55,321.51
360. . 12/1/2047 1015.71 3.27 1009.17 $0.00. .
total ------- 365,653.09 149,656.36 215,996.73 ---------
Payment number 146 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $66,343.64 (less) than the mortgage.

The total amount of interest is 21.7% (less) than the mortgage.

The total amount of interest is 69.3% 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 $123,583.29.

The total amount of interest paid with the $100 monthly extra payment would be $26,073.07
(less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 17.4% (less)
than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 25 years and 5 months;
thats 65 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.
Purchasing a house at the cost of $270,000, with a down payment of $54,000, Chase bank is offering

a 15-year mortgage with an interest rate of 3.25%, or a 30-year mortgage at 4.0%. The monthly payment on a

15-year mortgage is $1504.68 a month. The 30-year mortgage monthly payment is 1015.71. The difference

between a 15-year mortgage and 30-year mortgage payments is $488.97. The big factor in deciding which

mortgage to go with comes down to how much can be afforded. Other factors that would influence a person

purchasing the house is the amount of financial security. Say this person can just barely make the a$1500

mortgage but is fully capable of paying $1015. Any financial turmoil or hardship could potentially cause this

person to be unable to pay their 15-year mortgage. If the 30-year mortgage is chosen, this person would be

living within their means. If all goes well financially, they do have the option of paying more on their loan.

Paying an additional $100 would pay off the loan in 25 years and five months, resulting in a savings of

$26,073.07.

Part II-

Reflection: Throughout this course, I have learned how quantitative reasoning is one of

the most real life-related math. For example, the Pythagorean Theorem can be used in to

determine the best size television for a room. In the Problem-Solving unit, I learned how to

calculate how much soil a yard would need. The mathematical concept I believe that will benefit
me in the future is Finance. The best way to generate wealth over a lifetime is buying a house.

When buying a house, I will need to calculate how large of a mortgage I can take on depending

on how much I can afford monthly. I would also want to know how much interest I will be

paying over the lifetime of the loan. I can also use the finance section to calculate how much

money I would need to put into my bank out for receiving a certain amount my retirement.

Overall, I believe it is important to have a good understanding of math. While we dont

encounter as much math in your daily lives, I think having the ability to know how to do it gives

you great opportunity to explore many different career fields. Even in situations like my case, in

which this will be my last math course, knowing these concepts have shown me how fun math is.