Math 1030

Name ________Brylee Gubler__

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 ______299,900______.

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

The down payment is __59980__. The amount of the mortgage is ___239920__.

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: ______US Bank_____________________.

Rate for 15-year mortgage: _4.125%____. Rate for 30-year mortgage ___4.625%___.

Name of second lending institution: _America First Credit Union_________.

Rate for 15-year mortgage: __4%____. 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: _$1774.66____. 30-year monthly payment __1215.64_

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 an MS excel file included on our CANVAS page if you are using a PC or you can also
use any online programs that are available such as the one on Brett Whissle’s website
http://bretwhissel.net/cgi-bin/amortize if you are using a MAC.
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. . 7/21/18 1215.64 899.70 315.94 239,604.06
2. . 8/21/18 1215.64 1798.22 633.06 239,286.94
60. . 6/21/23 1215.64 51,724.44 21,213.93 218,706.07
120. . 6/21/28 1215.64 81,798.94 37,333.72 202,586.28
240. . 6/21/38 1215.64 158,737.29 106,271.10 133,648.90
300. . 6/21/43 1215.64 191,831.41 182,585.52 57,334.48
360. . 6/21/48 1215.64 197,710.18 239,920.00 $0.00 .
total ------- ---------- 197,710.18 239,920.00 ---------

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

The total amount paid is the number of payments times __interest___________.

The total interest paid is the total amount paid minus _____Principal____________.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number _176____ is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $______42209.82 Less _______ (more or less) than the
mortgage.

The total amount of interest is __17.5 Less_____% (more or less) than the mortgage.

The total amount of interest is ___82_____% of the mortgage.

15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 7/21/18 $1,774.66 799.73 974.93 238,945.07
2. . 8/21/18 $1,774.66 1,596.22 1,953.10 237,966.90
50. . 8/21/22 $1,774.66 35,784.82 52,948.14 186,971.86
90. . 12/21/25 $1,774.66 57,590.32 102,129.01 137,790.99
120. . 6/21/28 $1,774.66 69,401.46 143,556.65 96,362.35
150. . 12/21/30 $1,774.66 76,863.12 189,335.77 50,584.23
180. . 6/21/33 $1,774.66 79,518.67 239,920.00 $0.00
total ------- ---------- 79,518.67 239,920.00 ---------

Payment number __1__ is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $_160,401.33 LESS___ (more or less) than the mortgage.

The total amount of interest is ______66% Less____% (more or less) than the mortgage.

The total amount of interest is ________33%_____% of the mortgage.

Notice how the 15-year mortgage reduces the amount of interest paid over the life of the loan.
Now consider again the 30-year mortgage 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
30 year: $164,840.10.
15 year: $73.393.06
The total amount of interest paid with the $100 monthly extra payment would be $
32,870.08 LESS_ (more or less) than the interest paid for the scheduled payments only.
15 year: $6125.61 Less
The total amount of interest paid with the $100 monthly extra payment would be _16%
LESS____% (more or less) than the interest paid for the scheduled payments only.
15 Year: 7% less
 The $100 monthly extra payment would pay off the mortgage in _25_ years and __7__
months; that’s _____51_ months sooner than paying only the scheduled payments.
15 year: payoff in 14 years. Which is 12 months sooner than paying only sched 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

The 15 year mortgage payment is $1774.66 whereas the 30 year mortgage monthly payment is
$1215.64. This is a difference of $559.02 monthly. However in the long run, if the fifteen year
loan is taken out you end up paying significantly less for the loan in total due to interest. In total
the buyer would end up paying $319,438.67 for the fifteen year loan and $437,630.18 in total for
the 30 year loan. This would save the buyer $118191.51 to take the 15 year loan.

(2) the 15-year mortgage interest to the 30-year mortgage interest

The interest paid for the 30 year loan is 197,710.10 whereas the interest paid for the 15 year loan
79,518.67. This is a difference being 118,191.43. This is not only due to a higher payment
amount monthly during the 15 year loan but also because of the varying interest rates. The initial
interest rate for a 15 year loan is .5% less, which over time can make a large difference.
However, it is generally harder for buyers to qualify for a 15 year loan. Especially because
lenders generally only give buyers a loan for a third of their income.

(3) the 15-year mortgage to the 30-year mortgage with an extra payment

After reviewing the numbers, I have come to the conclusion that making an extra monthly
payment of even $100 can significantly offset the interest paid and the duration of a loan. This
method is more beneficial if the buyer has taken out a 30 year loan.

Interest paid with a $100 a month extra payment is:

30 year: $164,840.10 which would save the buyer $32870.08 in interest alone. As well as paying
the balance 51 months early.

15 year: $73.393.06 which would save the buyer $6125.61 in interest. As well as paying the
balance one year early.

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.