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Math 1030

Name: Emilio Gonzalez, Ari Beckes


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 _$259,900___________.

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

The down payment is 51,980. The amount of the mortgage is 207,920

Ask at least two lending institutions for the interest rate for both a 15-year and a 30-year fixed
Zarate mortgage with no points or other variations on the interest rate for the loan.

Name of first lending institution: _____MACU______________________.

Rate for 15-year mortgage: _3.125%___. Rate for 30-year mortgage 3.750%.

Name of second lending institution: ___Chase__________.

Rate for 15-year mortgage: _2.79%__. Rate for 30-year mortgage _3.32%___.

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: $1414.95. 30-year monthly payment $912.89.

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 schedule 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.. 11/16/17 1,414.95 483.41 931.54 206,988.46
2.. 12/16/17 1,414.95 481.25 933.70 206,054.76
50.. 12/16/21 1,414.95 371.15 1,043.81 158,588.56
90. . 04/16/25 1,414.95 269.54 1,145.41 114,784.81
120. . 10/16/27 1,414.95 186.89 1,228.06 79,155.79
150. . 04/16/30 1,414.95 98.28 1,316.67 40,956.01
180. . 10/16/32 1,414.95 3.20 1,408.39 $0.00. .
254691.1917 46771.1917 161,148.8083
total ------- ---------

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


The total principal paid is the same as the original loan amount.
The total amount paid is the number of payments times ____180months ____________.
The total interest paid is the total amount paid minus _____the principal________.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number 111 is the first one in which the principal paid is greater than the interest
paid.

The total amount of interest is $ 46,771 less than the mortgage.

The total amount of interest is 77% Less than the mortgage.

The total amount of interest is 22% of the mortgage.


30-year mortgage

Payment Payment Payment Interest Principal Remaining


Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 11/16/17 912.89 575.25 337.64 207,582.36
2.. 12/16/17 912.89 574.31 338.57 207,582.36
60. . 10/16/22 912.89 515.47 397.42 185,915.95
120. . 10/16/27 912.89 443.81 469.08 159,944.52
240. . 10/16/37 912.89 259.41 653.48 93,109.21
300. . 10/16/42 912.89 141.59 771.30 50,404.49
360. . 10/16/47 912.89 2.52 907.85 $0.00. .
328,639.7432 120,719.7432 87200.25683
total ------- ---------

Payment number 111 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $ 120,719.74 Less than the mortgage.

The total amount of interest is 41% LESS than the mortgage.

The total amount of interest is 58% 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 $ 99,724.29

The total amount of interest paid with the $100 monthly extra payment would be $20,995.45
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% less
than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 4 years and 7 months;
thats 56 months sooner than paying only the scheduled payments.
The 15-year mortgage is by far the best interest wise but the only negative thing about the 15-
year mortgage is that the monthly payments are extremely high. The 30-year mortgage
is the lowest in monthly payments but has a high interest rate when comparing the two
rates you can see that with the 30-year mortgage you are paying a total of 120,719 dollars
in interest at the house its self is only 207,920 dollars so you are paying so much interest
compared to the interest rate of the 15 year which is 14,771 dollars. which makes the 30-
year mortgage is 717% more than the 15-year mortgage. So, if you have a great job and
are making enough money to afford the 15-mortage I would choose that and do not plan
on staying in a home that long. But if you see in the information above you will be able
to see that if you make an extra one hundred dollars on the 30-year loan payment would
make the interest 20,000 dollars less which brings it to 99,000 instead of 120,000 of
interest and still makes monthly payments affordable. Also, if we are waiting to pay off
the house 15 years earlier I computed some numbers so if the 100 dollars extra a month
take off four years and 7 months than 300 dollars extra a month would take off a total of
14 years and 1 month and you will still be paying less in monthly payments than you
would have been paying with the 15-year mortgage. The interest drops down to 70,000
better as well I would honestly choose the 30-year loan better than any of the other
mortgages even if the interest is a little higher you will be paying off the house faster
with just adding a couple hundred dollars more to the monthly payment. So if you are
wanting to get a home loan you should definingly be shooting towards a 30-year
mortgage because yes it might have high interest but you also have to put in mind that
the house market grows and the value of the home increases over time so you might be
able to sell you house and have a huge profit increase if you paid it 15 years earlier with
only 300 dollar payment.

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