Math 1030

Name Millie Swensen

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 $264900.

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

The down payment is $52980. The amount of the mortgage is $211920.

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: Bank of America.

Rate for 15-year mortgage: 4.125%. Rate for 30-year mortgage 4.875%.

Name of second lending institution: Wells Fargo.

Rate for 15-year mortgage: 4.375%. Rate for 30-year mortgage 4.875%.

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: 1580.85. 30-year monthly payment 1027.07.

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. ​. 02/01/19 $1,121.50 $860.93 $260.57 $211,659.43

2. ​. 03/01/19 $1,121.50 $859.87 $261.63 $211,397.80

60. ​. 01/01/24 $1,121.50 $790.51 $330.99 $194,255.85

120. ​. 01/01/29 $1,121.50 $699.36 $422.14 $171,727.07

240. ​. 01/01/39 $1,121.50 $434.83 $686.67 $106,347.92

300. ​. 01/01/44 $1,121.50 $245.72 $875.78 $59,609.70

360. ​. 01/01/49 $1,121,50 $4.54 $1,112.42 $0.00 ​.

total ------- --------- $3,895.76 $3950.20 ---------

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

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

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

Use the proper number to fill in the blanks and cross out the
improper word in the parentheses.
Payment number 191 is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $20,100.70( less) than the mortgage.

The total amount of interest is 9.5% (

less) than the mortgage.

The total amount of interest is 90.5% of the mortgage.

15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)

1. . 02/01/19 $1580.85 $728.48 $852.38 $211,067.62

2. . 03/01/19 $1580.85 $725.54 $725.54 $210,212.31

50. . 03/01/23 $1580.85 $572.39 $1,008.46 $165,506.06

90. . 07/01/26 $1580.85 $424.02 $1,156.84 $122,193.75

120. . 01/01/29 $1580.85 $298.58 $1,282.28 $85,576.56

150. . 07/01/31 $1580.85 $159.53 $1,421.32 $44,988.82

 180. . 01/01/34 $1580.85 $5.42 $1,570.02 $0.00

total ------- - - - - - - - - - $2913.96 $8016.84 ---------

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Payment number 1 is the first one in which the principal paid is greater than the interest
paid.
The total amount of interest is $139,286.19 ( less) than the mortgage.

The total amount of interest is65.7% ( less) than the mortgage.

The total amount of interest is 34.3% 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
$155,691.78.

The total amount of interest paid with the $100 monthly extra payment would be
$36,127.52 (less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
19.9% ( less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 25 years and
.08 months; that’s 4.92 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.
There is a 15-year mortgage payment and a 30-year mortgage payment. You must pay
$264,900 for the home. We know that the 30 year monthly payment is $11,121.50 and the 15
year monthly payment is $1,580.85. If you are financially stable choosing the 15-year is the best
option. Because the 15-year monthly payments are more expensive, not everyone can choose
that plan. When comparing the 15- year plan to the 30-plan, the 30-year plan has a smaller
interest rate. The 30-year mortgage interest was 9.5% compared to a mortgage interest rate of
65.7% from the 15-year plan. In this case the 30-year plan would be the better option because
the interest rate is much smaller. Adding the extra $100 will help you pay the loan off faster but
it still is not more beneficial than the 15 year loan.