Rodrigo Gonzalez

Math 1030

Reflective Writing for Mortgage Project

In this lab we looked using formulas to calculate mortgage payments and pick the best loan term that

would help us pay off the loan faster. We used the loan formula to calculate our monthly payment if the

loan was a 30-year loan at 4.46% interest. Afterwards we used the compound interest formula to see

how much would be left on the house after 10 years of paying. Plus, we then determined if we’d gain

any money if we sold the house at that time as well. Finally, we looked at what a 15-year mortgage

would look like and also what it would look like if we stuck with the 30-year mortgage but paid extra

each month.

I do believe that this project helped me see how math can be applied in the real world. For example, I

can do work on my end to determine whether a loan is right for me. That’s a real-world scenario, it isn’t

abstract, it’s something that almost everyone will have to deal with at some point in their life.

Another application where this type of analysis would be beneficial is buying a new car. You could make

sure the terms work for you, that you could afford the monthly payment. You could then see if it’s worth

it to sell your car to buy a new one. I know the value in each item are different, houses will normally

increase in value as cars can tend to decrease in value over time.

I do think it would be very important to explain the details of this project to clients. You want to

ensure clients have all the options afforded to them. But also, they need to make an informed

decision when buying a home, it isn’t an impulse buy. While, you may have tools that can easily

handle the calculations, it’s still beneficial to be able to explain the logic. So, if someone is

confused by the result, you can walk them through the process.
 Rodrigo Gonzalez
Math 1030

The pros and cons of each plan are small but can have a big impact. Overall, the 30-year plan is

standard, you’ll end up paying more than what you purchased the house for, due to interest.

The 15-year is a shorter term, so you pay it off sooner, so the overall amount paid to interest

can be lower. However, there is the drawback that your monthly payment will be higher since it

needs to be paid off sooner. The final option, the 30-year plan with extra payments seems to be

the best fit, since you can be flexible if you need to be. It still has the lower payments of the

standard 30-year plan, but you have the flexibility to pay more if you can. If you have an

unexpected expense, you can divert the extra money to that expense. Whereas with the other

plans, if you have a surprise expense, you are stuck trying to balance your budget and may not

be able to. I think the negative with this plan is that you must stick to it, if you decide that

you’re just going to keep the extra money, then you’re not really following the plan anymore

and you’re just doing the standard 30-year plan.

I don’t believe this changed my opinion on the usefulness of math. This is an example I’m

familiar with, so I could already see the real-world implications. So, I still believe math is useful,

it reinforced opinions I already had. When we bought our house last year, we did some form of

this project, to make sure that we could afford the house we were trying to buy. We figured out

the maximum loan we could get, then when we looked at the house, we looked at what our

monthly payment would be and if it didn’t work, moved on to another house.

Finally, the average salary for someone with a master’s in information systems is around

$89,571. With that salary, I could afford the house in this project as I could still pay for the

house and cover expenses. It doesn’t change my view of purchasing a home, but I think it’s

important to note that it’s not just my salary, but my wife’s that is apart of any equation. So
 Rodrigo Gonzalez
Math 1030

that will help as well. But regardless of that, I could still afford this home, which feels great. I

don’t think there currently is a home that cheap that would work for me, but that’s a different

problem.