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Math 1030

Name ______________________________
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. Your submission must be in pdf format, submitted in Canvas. I will not accepted
assignments not submitted correctly. I will not accept e-mailed assignments. Refer to the
assignment rubric to see how you'll be graded.

The listed selling price is __$298,770_____.

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

The down payment is __$59,754____.The amount of the mortgage (loan) is


_$239,016___.

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: __3.875%__. Rate for 30-year mortgage _4.5%_____.

Name of second lending institution: _____America First Credit Union_____.

Rate for 15-year mortgage: _3.875%___. Rate for 30-year mortgage _4.62%___.

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: _$1,753.04__. 30-year monthly payment _$1,228.16__.

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.
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.
15-year mortgage

Payment Payment Payment Interest Principal Remaining


Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. 4/1/18 1,753.04 771.82 981.22 238,034.78
2. 5/1/18 1,753.04 768.65 984.38 237,050.40
50. 6/1/22 1,753.04 603.90 1,149.14 185,865.43
90. 10/1/25 1,753.04 445.73 1,307.31 136,725.40
120. 4/1/28 1,753.04 312.97 1,440.07 95,480.50
150. 10/1/30 1,753.04 166.73 1,586.30 50,047.14
180. 4/1/33 1,747.40 5.64 1,741.75 $0.00. .
total (over the
------- $315,547.20 $76,531.20 $239,016 ---------
entire loan)

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


The total principal paid is the same as the __Loan amount_______.
The total amount paid is the number of payments (180) times monthly payment amount.
The total interest paid is the total amount paid minus __the principal loan amount__.

Use the proper number to fill in the blanks and cross out the improper word in the
parentheses.

Payment number 1 is the first one in which the principal paid is greater than the interest
paid.

The total amount of interest is $162,484.80 less than the mortgage.

The total amount of interest is 68% less than the mortgage.

The total amount of interest is 32% of the mortgage.


30-year mortgage

Payment Payment Payment Interest Principal Remaining


Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/1/18 1,211.06 896.31 314.75 238,701.25
2. . 5/1/18 1,211.06 895.13 315.93 238,385.32
60. . 4/1/23 1,211.06 818.53 392.53 217,882.01
120. . 4/1/28 1,211.06 719.69 491.37 191,426.56
240. . 4/1/38 1,211.06 441.09 769.97 168,492.41
300. . 4/1/43 1,211.06 247.22 963.84 64,960.45
360. . 4/1/48 1,206.53 4.52 1,202.1 $0.00. .
total (over
the entire ------- 435,981.60 196,965.60 239,016 ---------
loan)

Payment number 176___ is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $_42,050.40____ less than the mortgage.

The total amount of interest is ____18% less than the mortgage.

The total amount of interest is ____82____% 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
$__164,117.29_.

The total amount of interest paid with the $100 monthly extra payment would be
$__32,848.31 less than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
__16____% than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 25___ years and _8_
months; that’s 52__ months sooner than paying only the scheduled payments.
Written Response:

Summarize what you have done and learned. Then make the necessary computations
to answer the following:

1) How does the monthly payment for the 15-year mortgage compare with the monthly
payment for the 30-year mortgage?
2) Compare the total amount of interest paid for both the 15-year mortgage and the 30-year
mortgage.
3) Compare the monthly payments and the total paid for the 15-year mortgage (no extra
payment) and the 30-year mortgage with the $100 extra payment.
4) How much extra would you have to pay each month on the 30 year mortgage in order to
pay it off in 15 years? Compare the total interest paid with this extra payment to the 15
year mortgage (no extra payments).

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.

1. The 15 year mortgage requires a payment of $1,747.04 each month, and the 30 year
mortgage requires a payment of $1,211.06 a month, which is $535.98 less per month.
2. If one chooses the 15 year over the 30 year mortgage, they will save $120,434.40 over
the life of the loan in interest.
3. The total amount paid for the 30 year mortgage with extra payments is $435,981.23 at
$1,311.06 per month. The 15 year mortgage total is $312872.04 at $1,738.18 per month.
The 15 year mortgage is $123,109.19 less total and $427.12 more per month.
4. $700 extra a month would be needed to pay the 30 year mortgage off in 15 years. The
total interest in this case would be $84,183.91, which is only about $7,652 more than the
interest paid on the 15 year mortgage at 3.875%.

While all of these numbers explain the raw information and amounts of money needed to
pay off a home, there are many other factors that need to be considered. One must think
about their pay rate, annuities that they might have, other debts such as cars, education, or
even things such as groceries and kids. There is also insurance, property tax, utilities, and
many other factors that go into buying a home. Whatever the case, one must consider
their monthly overhead with their monthly income and consider how much they will
profit each month.