Trina Finsand

10/18/2021

Math 1030

Reflective Writing for Mortgage Project

The Mortgage Project was a lab where I was instructed to calculate comparisons

between a traditional 30 year mortgage, 15 year mortgage, and 30 year mortgage with

extra money applied to the monthly payments. Using several different loan formulas,

percentage calculations, and standard arithmetic, I was able to calculate monthly

payments based on the loan starting amount, down payment totals, total interest paid,

minimum income required, and more.

I believe this lab could absolutely be applied to real-world situations. It is a very

common experience to have at least one mortgage during our lifetime, and I believe it

is important to recognize the cost, and some potential better financial options. A

mortgage can be a great thing, or possibly a giant financial burden if not handled

correctly, so being able to calculate what we can afford and what will be the most

financially beneficial is a great skill to have.

Analysis of this kind can be used in many ways. Most types of consumer loans

(auto loan, personal loan, RV loan, etc) and real estate loans can and should be

reviewed in this manner. Knowing how to best choose your loan and maximize the

reach of your income is incredibly important. Alternatively, this type of calculation can be

used when comparing savings accounts interest rates, CD rates and terms, IRA

accounts and other deposit products.

 If I were a mortgage broker, it would be important for me to explain the details of

the project to clients because everyone taking on that financial responsibility should be

aware of what options they have and what will be best for them. Most people who are

new to mortgages or are a first time buyer will not go into an application knowing all of

the details and options, as a broker it would be my job to change that.

The 30 year mortgage will have the lowest monthly payment, but the borrower

will end up paying the most in interest by the end of the term. By doing the 30 year

mortgage but paying an extra $100 (or more) monthly, the borrower will end up paying

less in interest by the end of the term but will still have the flexibility of using the lower

minimum payment if they need it. The 15 year mortgage has the lowest overall interest

by far, typically with a lower interest rate and also less accrued with the shorter term.

However, this option would have a substantially higher monthly payment, so the

borrower would want to consider if that would be beneficial and if they would stay at

35% of monthly income going to housing.

I work as a consumer loan officer currently, so I am aware of how important math

is in our lives, but even with that in mind I have never looked at mortgages this way. It is

amazing that we can calculate so much with some relatively simple formulas. This has

encouraged me to try it out on my own mortgage and see if there are some changes I

should make.

My major is still currently undecided, but I decided to test out the income theory

on a potential future career of Botany. The median annual salary of a botanist is actually

comparable to the income calculated from the lab, about $50k-$60k. That gives me a

good idea of how much I could afford based on my own income, not including potential
spousal income that would also contribute. Very good to know!