Beruflich Dokumente
Kultur Dokumente
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.
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.
Rate for 15-year mortgage: _______4%_____. Rate for 30-year mortgage ______4.5%___.
Rate for 15-year mortgage: ___3.875%__. Rate for 30-year mortgage ____4.375%____.
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: $1173.50 with Cyprus. 30-year monthly payment $798.86 with
Cyprus.
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 are many programs online available for this including Brett Whissle’s website:
http://bretwhissel.net/cgi-bin/amortize.
It’s 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
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.
30-year mortgage
Payment number _171_ is the first one in which the principal paid is greater than the interest
paid.
Consider the 30-year mortgage again and suppose you paid an additional $100 a month
towards the principal [If you are making extra payments towards the principal, include it in the
monthly payment and leave the number of payments box blank.]
The total amount of interest paid with the $100 monthly extra payment would be
$__98,574________.
The total amount of interest paid with the $100 monthly extra payment would be
$_29,014.31__________ less than the interest paid for the scheduled payments only.
The total amount of interest paid with the $100 monthly extra payment would be
____23.7______ less than the interest paid for the scheduled payments only.
The $100 monthly extra payment would pay off the mortgage in __24__ years and __0__
months; that’s ___72___ months sooner than paying only the scheduled payments.
Summarize what you have done and learned on this project in a well written and typed
paragraph of at least 100 words (half page). Because this is a math project, you must
compute and compare numbers, both absolute and relative values. 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
year mortgage payment was $1173.50 per month, while the 30 year payment was only $798.86
per month. That is a $374.64 per month difference. By paying the higher amount per month with
the 15 year plan, however, you pay $51,230.58 in interest, which is $76,357.73 less than the
$127,588.31 you pay with the 30 year plan. The best plan to choose depends on your personal
financial stability. If you can afford the higher monthly payments up front, you save $76,357.73
in the long run. If your monthly income isn’t very high, but you know you have long term job
security and can maintain payments for 30 years, then that could be a better option. If you have
some flexibility, it is helpful to pay more than your monthly amount. Just by paying an extra 100
on top of your monthly payments with the 30 year mortgage, you can save yourself $29,013.47
in interest over the long run. When considering buying a house, it would be wise to buy a house
below your budget because the more money you can spend on principal early on, the more you
save on interest. You must also factor in property taxes, homeowners insurance, and
approximately 1% of your home’s value per year in maintenance into your budget. You should
only buy a house that you plan on staying in for at least 5 or more years because a large portion
of your initial payments are going towards interest. For example, in the 30 year mortgage, it
wasn’t until payment 171 that a majority of your payment went towards principal over interest
and while the majority of your payments went towards principal from the first payment with the
15 year plan, it was only by $70.09. The best mortgage option varies from person to person
depending on a lot of different factors, therefore it is smart to sit down and do the math yourself