Reflective Writing for Mortgage Project

In this lab we figured out the monthly payment of a home given the original purchase price, down

payment, interest rate of the loan, and different loan terms. We used Amortized Loan Formulas to

calculate interest paid and what could be saved by paying extra or having a shorter loan term.

 Do you think this project shows how math can be applied to the real world? If "yes", please

elaborate on why the results are important or beneficial. If "no", how could the lab change to

make it more applicable to the "real world"? Yes, this was applicable to the real world. Most

likely individuals will eventually purchase a home and should know how much they can afford

for their payments. It is also worthwhile to know the benefit of paying extra when possible or

having a shorter loan to save on interest.

 Can you give an example of another application where this type of analysis would be beneficial?

Be specific. We can use similar formulas to find how much is needed in a retirement account

based on how much you would like to withdraw each month after retiring. Similar techniques

could be used to determine how much you need to deposit into a retirement account each

month to get to that amount.

 If you were a mortgage broker, why would it be important to be able to explain the details of

this project to clients? To help them understand the long-term cost of the loan and the benefit

of shortening the life of the loan.

 Compare the differences between the 30-year, 15-year, and 30-year with extra payment plans.

What are the "pros and cons" of each? The 30 year is the least expensive per month but is the

most expensive over the life of the loan. A 15-year loan is substantially more expensive each

month, but you will save on monthly interest and total paid interest. The 30 year with extra

payment plans could be considered the most popular option for people that are frugal with their
 money. The lower monthly payment allows for more flexibility. By paying extra you can save

thousands on interest vs the full term of the loan besides making it closer to the interest of the

15-year loan. I am currently in a 30-year loan and making extra payments because of the benefit

of lowering my loan amount quicker.

 Did this assignment change your opinion of the usefulness of math? Write one paragraph stating

what ideas changed and why. If this project did not change the way you think, write how this

project gave further evidence to support your existing opinion about applying math. Be specific.

Yes, I liked how we can use the finance formulas like Amortized loan formula to figure out how

much interest will be on a loan and how to figure out how much you will have to pay monthly on

a home loan.

My profession of choice is teaching. The median salary for teachers is $55,000 a year in the state of

Utah. Based on the 35 percent rule used in this lab I would not be able to afford this home without a

much higher down payment. Note to self, teachers don’t make a lot of money period!