Math 1030

Name ________Joshua Fox_________

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 ____$320,000________.

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

The down payment is ____$64,000________. The amount of the mortgage is

____$256,000________.

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: ______Wells Fargo_____________________.

Rate for 15-year mortgage: __3.00%__________. Rate for 30-year mortgage

_____3.75%_______.

Name of second lending institution: __________Chase Bank_________________.

Rate for 15-year mortgage: _____2.875%_______. Rate for 30-year mortgage

___3.5%_________.

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: ___$_1,752.24________. 30-year monthly payment

____$__1,149.55______.

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 sschedule 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. . 4/2/2017 1,752.54 613.33 1,139.21 254,860.79
2. . 5/2/2017 1,749.80 607.87 1,141.94 253,718.86
50. . 5/2/2021 1,749.47 468.54 1,280.93 195,564.36
90. . 9/2/2025 1,749.16 339.56 1,406.23 141,730.46
120. . 10/2/202 1,748.91 234.40 1,514.91 97,835.10
7
150. . 9/2/2030 1,748.64 121.40 1,627.24 50,672.67
180. . 3/2/2032 1,748.35 0.00 1,748.35 $0.00. .
total ------- 314,846.50 58,846.50 256,000 ---------

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

The total principal paid is the same as the _________Mortgage Amount_____________.
The total amount paid is the number of payments times ______Payment Amount____.
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 ___One__ is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $____197,153.50 Less (more or less) than the mortgage.

The total amount of interest is ___77.041 Less__% (more or less) than the mortgage.

The total amount of interest is ___23__________% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/2/2017 1,149.55 746.67 402.89 255,597.11
2. . 5/2/2017 1,148.38 744.31 404.06 255,193.05
60. . 3/2/2022 1,148.16 669.74 478.42 229,624.51
120. . 3/2/2027 1,147.89 578.12 569.77 198,212.80
240. . 3/2/2037 1,147.20 339.06 808.13 116,250.63
300. . 3/2/2042 1,146.75 184.31 962.44 63,190.99
360. . 3/2/2047 1,146.21 0.00 1,146.21 $0.00. .
total ------- 413,094.09 157,094.09 256,000 ---------

Payment number 123 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $____98,905.91 Less__ (more or less) than the mortgage.

The total amount of interest is __38.64____Less___% (more or less) than the mortgage.

The total amount of interest is _____61.36________% 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
$___133,907.09_______.

The total amount of interest paid with the $100 monthly extra payment would be
$____23,187__Less_ (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
____14.76___Less_% (more or less) than the interest paid for the scheduled payments
only.

The $100 monthly extra payment would pay off the mortgage in 26____ years and _1___
months; thats ___47___ 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.

While the thirty-year mortgage may seem to be more preferable at first glance, when you
compare it with the fifteen year loan overall, I believe that the fifteen year mortgage is
the way to go. Overtime you save more than 37% on interest alone. The interest really
adds up over time, obviously giving the edge to the fifteen year mortgage. If you are
making an extra payment on your thirty year loan you are doing yourself a big favor.
Over that time period you end up saving yourself near thousands of dollars. If you
could have the means to pay enough extra payments to cut your thirty year loan into a
fifteen year loan you would save yourself a lot of money when it comes to interest. You
would end up saving 76,000 dollars of interest alone if you could double up on your
payments. When considering what type of mortgage you want to have you need to look
at your situation. Factors such as being able to make extra payments, being able to
make the initial payment, how long you plan to stay in your home, if you plan to
renovate, and many other things play into what is best for you.