Moving out because of Math 1030

Josh Wheeler

Math 1030 (Gardner)

Math is everywhere around us. It is the way that we quantify our world. Math makes our world

tangible. It is a crucial part of my life; both at work and at home. Math 1030 has led to me

moving out of my home. I will get to that later.

Math makes my work possible. I work as a surveyor in Vernal, Utah. As a surveyor, I frequently

use trigonometry to measure angles and distances. Math can be used to determine distance,

elevation, slope, angles, and area. By better understanding trigonometric equations, my work

becomes more natural. Calculations are used frequently in engineering and construction projects.

In a single building project, math is used for hundreds of things. Cut and fill slopes of dirt,

determining the finished grade of the concrete floor, figuring out what loads that the building

materials can withstand, and even calculating cost of the construction project to determine if the

future business will be profitable.

It is clear that math is paramount in my field of work. However, when I come home and kick off

my shoes after a long day, it seems like math may have no place. As I completed some of the

projects in my math class, it became apparent that math surrounds us at home. This signature

assignment has opened my eyes to the applications of math. In the assignment, we were told to

locate a “Mock” home to use as a platform to learn about compound interest, and amortization. I

looked through houses to find one that I could really see myself in. This would help me get

“into” the assignment. Before I knew it, I was making a real offer on this house. Yes, the one in

the pictures below. Our current house is on the market and we are getting packed and ready to
move into the new house. As I go through financing for this house, I am grateful for the tools I

have been given to calculate monthly payments, down payment amount and how much principal

and interest I will be paying. I can honestly say that math has changed my life. I see things in a

different light as I realize how extensively math is used to analyze our orchestrated world.
 The listed selling price is $224,900.00

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

The down payment is $44,980.00 The amount of the mortgage is $179,920

Name of first lending institution: Wells Fargo

Rate for 15-year mortgage: 4.250% Rate for 30-year mortgage 4.750%

Name of second lending institution: Mountain America Credit Union

Rate for 15-year mortgage: 4.000% Rate for 30-year mortgage 4.625%
 15-year monthly payment: $1330.85. 30-year monthly payment $925.04.

These payments cover only the interest and the principal on the loan. They do not cover the
insurance or taxes.

30-year mortgage @4.625%

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 8/1/2018 925.04 693.44 231.60 179,688.40

2. . 9/1/2018 925.04 692.55 232.49 179,455.91

60. . 7/1/2023 925.04 634.44 290.60 164,319.70
120. . 7/1/2028 925.04 558.99 366.05 144,669.33
240. . 7/1/2038 925.04 344.26 580.78 88,739.63
300. . 7/1/2043 925.04 193.48 731.56 49,467.60
360. . 7/1/2048 921.49 3.55 917.94 0.00 .
total ------- ---------- 153,094.33 179,916.45 ---------

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

The total amount paid is the number of payments times the payment amount (Plus the
down payment if you want to get more specific).

The total interest paid is the total amount paid minus The initial amount (P sub 0).

Payment number 181 is the first one in which the principal paid is greater than the interest
paid.

The total amount of interest is $26,825.67 less than the mortgage.

The total amount of interest is 15% less than the mortgage.

The total amount of interest is 85.09% of the mortgage.

15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 8/1/2018 1,330.85 599.73 731.11 179,188.89
2. . 9/1/2018 1,330.85 597.30 733.55 178,455.34
50. . 9/1/2022 1,330.85 470.25 860.60 140,213.31
90. . 1/1/2026 1,330.85 347.72 983.13 103,331.75
120. . 7/1/2028 1,330.85 244.50 1086.35 72,263.73
150. . 1/1/2031 1,330.85 130.45 1,200.40 37,933.96
180. . 7/1/2033 1,326.43 4.42 1,322.00 $0.00
total ------- ---------- 59,632.37 179,920.00 ---------

Payment number * is the first one in which the principal paid is greater than the interest paid.
*(The Loan begins with a larger principle payment than interest payment).

The total amount of interest is $ 120,287.63_____ (less) than the mortgage.

The total amount of interest is 66.86 % (less) than the mortgage.

The total amount of interest is 33.14 % 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 $120,806.89

The total amount of interest paid with the $100 monthly extra payment would be $32,287.44
less than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
21.09% less than the interest paid for the scheduled payments only.
 The $100 monthly extra payment would pay off the mortgage in 24 years and 5 months;
that’s 66 months sooner than paying only the scheduled payments. (5.5 Years sooner!)

“The Secret of the 15 Year Loan”

Josh Wheeler

My eyes have been opened to the difference interest makes. Upon comparing the 30 year

loan, 30 year loan with $100 extra principle payment per month, and the 15 year loan; it seems

that the 30 year loan is the cheapest option, followed by the 30 year with an extra $100 dollar

payment, followed by the 15 year loan. Upon looking deeper, I was surprised by the results.

Initially, the 30 year loan appears to be much cheaper if you look at the monthly

payments alone. At $1,330.85 a month, the 15 year loan costs $405.81 dollars more a month than

the 30 year mortgage. On a month to month basis, the 30 year loan seems like the much better

option over the 15. The monthly payment of the 15 year loan is 44% more than the 30 year loan.

Paying an extra hundred dollars a month on either of these plans makes no sense if you are trying

to make the smallest monthly payment possible. If you didn’t look any deeper than this, you

might be missing out on some serious long term savings.

Upon doing more research, we find out that the “long term savings” are significant. As

we analyze the numbers more closely, it becomes apparent that the 15 percent loan is a much

better value. While the 30 year loan has a lower monthly payment, most of that payment is going

toward interest. Of the first payment of the 30 year loan, you pay $693.44 in interest and only

$231.60 goes toward principal. You pay almost 3 times the amount in interest as you do toward

your house. In the 15 year loan, you begin the loan off right. At the start of the 15 year loan, the

interest rate is already lower than the principle ($731.11 Principle and $599.73 interest).
 I thought the interest vs. principal numbers were drastic in the initial payment of the 30

year loan vs. the 15. The difference in total interest over the life of the loans is much more

drastic. In the 30 year, you pay $153,094.33 in interest where you only pay $59,632.37 in interest

for the life of the 15 year loan. You save $93,461.96 in interest by going the 15 year loan route.

You could buy a $90,000.00 Tesla Roadster with that much money or another small house.

You decide that you like the idea of saving loads on interest, but what if you can’t afford

the extra $405.81 dollars a month for the 15 year loan? I have learned that even by making 100

dollar extra payment every month can make a big difference in the total interest you will pay

over the life of the loan. You can choose to do this on the 30 year loan or the 15 year loan. The

pro to this method is flexibility. You can pay an extra $200 one month and nothing extra another

if you are tight on cash. If you pay an extra $100 every month on the 30 year loan, you will only

end up paying $120,806.89 in interest over the life of the loan, which is $32,287.44 cheaper than

the original 153,094.33 you would have paid otherwise. This is significant.

If you decide that the savings on the 15 year loan isn’t good enough. Pay an extra $100

dollars every month on it, and you will end up paying a total of $53,663.47 in interest over the

life of the loan which makes for an additional $5,968.90 dollars saved on interest over the life of

the loan.

Smaller payments seem better to start with. Depending on your situation, smaller

payments may allow you to attend college or support a family. However, if you can afford to pay

a little extra each month on the 30 year loan, or switch to a 15 year loan you can save a lot of

money on interest. Once I started getting into the numbers I realized something. While the 15

year loan costs 44% more per month than the 30 year loan, it is paid off 100% faster. Every

situation is different, but I would rather have a lot more in the future than a little more right now.