/ Ste Math 1090 Mortgage Projet oR Name, 0 n Due date: 1-22-10 \ In this project we will examine a home loan or mortgage. Assume that you have found a home forsale and have agreed toa purchase price of 194,100 * ome found Is atiatcned to the Back. + Down Payment: You are going to make a 10% down payment on the house. Determine the ‘amount of your down payment andthe balance to finance, Down Payment 1.140 Magne Amount, UIA AO. ‘Part |_30 year Mortgage “Monthly Payment: Calculate the monthly payment for 430 year loan (rounding up to the nearest cent) by using the following formula. Show your work. [PMT is the monthly loan payment, is the morigage amount, ris the annual pereent rate forthe loan in decimal, and is ‘the numberof years to pay off the loan ] For the 30 year loan use an annual interest rate of ans, eae 1- (ley Soweto 119, 910( 4975 ——____ \- ‘ + .04975)"09 (2 = 103.05 Mombly Paymet fora 30 yeamortgage 1103 OS [Note that tis monthly payment covers only the interest and the principal onthe loa. It doesnot ‘over any insurance or taxes onthe property “Amortization Schedule: In order to summarize all he information regarding the amortization of ‘loan, construct a schedule that Kees tack ofthe payment number, the pitcipal paid, the interest, and te unpaid balance. A spreadsheet propram isan excellent oo to develop ansmorintion scala, Wecan uae anotnion spread th web. ‘The web address is: hup//www bretwhissel nev/amortization/amoctize html. Enter the amount a tbelan,ts he selling pce mins he own payment, te ners rate, and he appropri Seubert ycor Cheol eben how be cht Amorzaon Schedule manly pamen fr 230 yer maignge © 103.05 {Now ithisismore than’ aeons flr fen Your odclan chek your manbers}) Total interest paid over 30 years *\'0 '0, 188 Toa amount paid * 3400, 1018 [Notice thatthe amount of the payment that goes towards the principal andthe amount that goes ‘towards the interest are not constant. What do you observe about each ofthese values? Zach month the Loan ts paid the dollar amoun+ Jorng yoward the Principal increases And tne AmMoum Gang towards interest decreases. [Number of first payment when more of payment goes toward principal than interest_|V|_ ‘As alteady mentioned, these payments are for principal and interest only. You will also have ‘monthly payments for home insurance and property taxes. In adition, iis helpful to have ‘money leftover for those litte luxuries like eletricty, running water, and food. As a wise home ‘ower, you decide that your monthly principal and interest payment should not exceed 35% of ‘your monthly take-home pay. What minimum monthly take-home pay should you have inorder ‘to meet this goal? Show your work for making this caleulaton. ‘Show work here Bre. got, > Te Ext = 38" T= 1603.05 = 2,15'-57 pe 735 Pmt = Payment T= Take nome Minimum monthly take home pay=_*2.15).57Its also important to note that your net or take-home pay (after taxes) i less than your gross pay (efor tes), Asmming it our net pay 73% oo os pay, wt nia ‘Coat salary ll ounce toimake wo heve the monly net salary sated above? Show your ‘work for making this calculation, ‘Show work here 113°G=T os Ga odo pata) T=Take home _G= Gross Minn post emery _* 3,104.27 Part IL; Selling the House Les suppos tht fier ving in the house for 10 yeas, you wana sel. The cemomy ‘experiences ups and downs, but in general the value of teal esate increases overtime, ae he ale of wives ach ele, we we cote coapoumded Find the value of the home 10 years after purchase assuming a of 4%, Use the full purchase price as the principal. Show your work. ‘Show wok here Azelityie > Ae 194,400.14 -04)'? = 295,901 P= Present Value A= future Vows Valo otha 10 yeu ster purchase _ 2.41901Use the amortization spreadsheet on the web again, this time entering the interest rate and ‘numberof payments fora 15 year loan. ‘Amortization Schedule monthly payment for a 15 year mortgage _® 1398-01 (cei tis more han 23 cts fret frm your elton, chek yoo mmr!) Total interest paid over 15 years_ 1 5131- GO Total amount paid ©2.S 1,641.80 amber offs payment when more of payment ges toward principal than intret_ © Suppose you paid an additional $100 towards the principal each month. How long would it take ‘pay off the loan with this additional payment and how will this affect the total amount of interest paid on the loan? [Ifyou are making extra payments towards the principal, include it in the monthly payment and leave the number of payments box blank] Length of time to pay of oan with addtional payments of $100 permonh_|'0 _Mmorrths ‘Total interest paid over the life of the loan with additional $100 monthly payments_ (01,35 % -S41 “otal amount paid with addtional $100 monthly payments 8244112 6 &+ 54 ‘Compare this total amount paid to the total amount paid without extra monthly payments, How :much more or fess would you spend if you made the extra pi Toral Scheduled Payments 1251, 41.80 scheduled Payments +@100 4 24420854 415373 -26| Total (ess interest Part II: Reflection Paid. Did this project change the way you think about buying a home? Writ one paragraph stating ‘what ideas changed and why. If this project did not change the way you think, write how this project gave futher evidence to support your existing opinion about buying a home. Be specific. Mis Project definitely Changed the way | think Aoout nome buying. inde | WAS always awsare that a Mortgage included g large SuM of WnTereSt, Vinad no idea of its \enmensity. For Some rhortgage loans the interest May equal almost thirty Ppercair Of the toial loan! Just as We See in the example OF a 15 Year mortgage arove-H defintely Malces he think {nie alovt Wuying a Heme And the dollar ammount of Rach Payment that wilt Tmnimje The toyal mterest Parc.