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# Math 1030

Project 1

Select a house from a real estate booklet, newspaper, or website. Find something reasonable between
\$100,000 and \$350,000. Cut out the picture and/or description of 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 _\$310,000____.
Assume that you will make a down payment of 20%.
The down payment is _\$62,000_____. The amount of the mortgage is _\$248,000____.
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: __Mountain America Credit Union___.
Rate for 15-year mortgage: __3.0%___. Rate for 30-year mortgage __3.875_____.
Name of second lending institution: ___USAA Bank_____.
Rate for 15-year mortgage: __2.5%_____. Rate for 30-year mortgage _3.375%____.
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: _\$1,653.64____. 30-year monthly payment _\$1,096.40_____.
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 are many programs
online available for this. A Microsoft Excel worksheet that does this available online at
http://office.microsoft.com/en-us/templates/loan-amortization-schedule-TC001019777.aspx?

CategoryID=CT062100751033. Its not necessary to show all of the payments. Fill in the sample of
payments in the following schedules, and answer the questions after each table.
15-year mortgage
Payment
Number

Payment
Date

Payment
Amount (\$)

Interest
Paid (\$)

Principal Paid
(\$)

Remaining
Balance (\$)

1.

12/01/2014

\$1,653.64

516.67

1136.97

\$ 246,863.03

2.

01/01/2015

\$1,653.64

514.30

1,139.34

\$ 245,723.69

50.

01/01/2019

\$1,653.64

394.60

1,259.03

\$ 188,150.69

90.

05/01/2022

\$1,653.64

285.31

1,368.33

\$ 135,579.07

120.

11/01/2024

\$1,653.64

197.15

1,456.49

\$ 93,176.51

150.

5/01/2027

\$1,653.64

103.32

1,550.32

\$ 48,042.15

180.

11/01/2029

\$1,653.64

3.44

1,646.76

\$0.00

\$11,575.48

\$49,654.70

\$248,000

Total

## The total principal paid is the same as the ___loan amount__.

The total amount paid is the number of payments times __180________.
The total interest paid is the total amount paid minus _principle (loan amount)___.
Use the proper number to fill in the blanks and cross out the improper word in the parenthesis.
Payment number _1 (one)__ is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is \$198,345.30 (more or less) than the mortgage.
The total amount of interest is 20% (more or less) than the mortgage.
The total amount of interest is __20___% of the mortgage.

30-year mortgage
Payment
Number

Payment
Date

Payment
Amount (\$)

Interest
Paid (\$)

Principal Paid
(\$)

Remaining
Balance (\$)

1.

12/1/2014

\$1,096.40

697.50

398.90

\$ 247,601.10

2.

1/1/2015

\$1,096.40

696.38

400.02

\$ 247,201.08

60.

11/01/2019

\$1,096.40

625.61

470.79

\$ 221,967.87

120.

11/01/2024

\$1,096.40

539.20

557.20

\$ 191,157.71

240.

11/01/2034

\$1,096.40

315.89

780.51

\$ 111,534.41

300.

11/01/2039

\$1.096.40

172.63

923.77

\$ 60,454.87

360.

11/01/2044

\$1,096.40

3.07

1,090.25

\$0.00

\$1,096.40

\$ 146,703.50

\$248,000

Total

Payment number 115 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is \$101,296.5 (more or less) than the mortgage.
The total amount of interest is 59% (more or less) than the mortgage.
The total amount of interest is59% of the mortgage.
Suppose you paid an additional \$100 a month towards the principal (30 Yr. Mortgage):
The total amount of interest paid with the \$100 monthly extra payment
would be \$ 124,595.18.
The total amount of interest paid with the \$100 monthly extra payment would be \$22,108.32 (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 _____-37.18______%
(less) than the interest paid for the scheduled payments only.
The \$100 monthly extra payment would pay off the mortgage in 26 years and 0 months; thats 48
months sooner than paying only the scheduled payments.

## Observations and Reflections:

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 30year mortgage with a large enough extra payments to save 15 years and have the loan paid off in 15
years. Also, you know that the numbers dont explain everything. Comment on other factors that must be
considered with the numbers when making a mortgage.
We have obtained a lot of applicable real-world knowledge and practice from this assignment.
Buying a house is not something we have all had experience with and it opened our eyes to the true cost
of homeownership, as well as the importance of finding the right mortgage length and lending institution
for our financial and income-related situations. (1) The total amount paid with the 15 year mortgage
comes to \$297,654.70, while the total amount paid with the 30 year mortgage is \$394,703.50. The total
payment for the 15 year mortgage is about 26% less than the total payment for the 30 year mortgage.* (2)
The 15 year mortgage interest totals to \$49,654.70 and the 30 year mortgage interest totals to
\$146,703.50. The interest for the 15 year mortgage is about 66% less than the interest for the 30 year
mortgage.** The mortgage for the both agreements are the same; each is 100% of the other because the
same amount is being borrowed.
Numbers, of course, dont explain everything in real world situations. As mentioned on the first
page, these calculated costs dont include things such as insurance or taxes. Other factors that could
potentially increase or alter the payments could be something as simple as missed or late payments,
changes in ownership (if you sell the house before youve paid for it in full), changes in insurance or
financing companies, and/or a change in payment plans.
*100(297,654.70-394,703.50)/394,703.50 = -24.58777285
**100(49,654.70-146,703.50)/146,703.50 = -66.15302293