Math 1030

Name Emiree Lang, Kenneth Heath

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 ___$260,000_________.

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

The down payment is _________$52,000___. The amount of the mortgage is

____________.

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__________________________.

Rate for 15-year mortgage: ___3.875%_________. Rate for 30-year mortgage

___________4.5%_.

Name of second lending institution: _Wells Fargo_.

Rate for 15-year mortgage: ____4.125%______. Rate for 30-year mortgage

______4.5%______.

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: _______$1525.55_____. 30-year monthly payment

____$1053.91________.

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.
.
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.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/1 $1525.55 $780.00 $273.91 $207,726.09
2. . 5/1 $1525.55 $778.97 $274.93 $207,451.16
50. . 6/1 $1525.55 $724.86 $329.04 $192.967.53
90. . 9/1 $1525.55 $671.72 $382.19 $178.742
120. . 3/1 $1525.55 $626.30 $427.60 $166,586.02
150. . 9/1 $1525.55 $575.49 $478.42 $152.984.51
180. . 3/1 $1525.55 $512.63 $535.27 $0.00
total ------- ---------

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

The total amount paid is the number of payments times - the value of the monthly
payment_.

The total interest paid is the total amount paid minus - The Principle Balance.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number 175___ is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $36,594.04__less (more or less) than the mortgage.

The total amount of interest is 82.24%_% (more or less) than the mortgage.

The total amount of interest is 17.59% of the mortgage.

15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/1/18 $1525.55 $671.67 $853.88 $207,146.12
2. . 5/1/18 $1525.55 $668.91 $856.64 $206,289.48
60. . 3/1/2023 $1525.55 $492.77 $1,032.87 $151,567.30
120. . 3/1/2028 $1525.55 $272.36 $1,253.19 $83,091.10
240. .
300. .
360. . $0.00 .
total ------- ---------

Payment number __1 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $141,400.24 less_ (more or less) than the mortgage.

The total amount of interest is 32.02_% less (more or less) than the mortgage.

The total amount of interest is 32.02 % of the mortgage.

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
$139,407.59__________.

The total amount of interest paid with the $100 monthly extra payment would be
$_199,265more (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
_96% more (more or less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 25____ years and __1__
months; that’s ____37__ 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

(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

Also, keep in mind that the numbers don’t explain everything. Comment on other factors that
must be considered with the numbers when making a mortgage.

Summary

When comparing a 15 year mortgage to a 30 year mortgage I found that I would save $471.64
monthly if I chose a 30 year mortgage. However, when comparing the total amount paid of both
loans I found that the 15 year loan saved me the most money. The 30 year loan would cost a total
of $379,405.96 including principle amount and total interest. The 15 year loan would be a total
of $274,599.76 with principle amount and total interest. Id end up spending a total of $104,
806.20 less with a 15 year loan. When comparing interest rates for both loans I found a 3.875%
interest rate for a 15 year loan and a 4.5% interest rate for a 30 year loan. The 15 year loan
interest rate is about 0.625% less than the 30 year loan. This means the total amount of interest
paid on the 15 year loan would be $66,599.76 and the total interest paid for a 30 year loan would
be $ 171,405.96. I would pay $ 104,801.20 more in total interest if I went with the 30 year loan.
By increasing the monthly payment of the 30 year loan by $100.00 monthly I was able to get the
number payment would still be $199.265 more than the total amount of interest paid on the 15
year loan.