Thitirat Pongprajuc

March 22, 2024

MATH 1035

Reflective Writing for Mortgage Project

During my lab, I studied how to use math in real-world situations, specifically when it

comes to buying a house and taking out a mortgage. I used different math techniques, such as

percentages, loan formulas, and logarithms to compare different mortgage options and

understand the financial side of buying a home. By doing this, I aimed to gain a better

understanding of how to make informed decisions about home financing.

In this project, I have learned how the concepts of mathematics can be put into real-life

scenarios. By using various formulas and percentages, I was able to compare different mortgage

options and comprehend their financial impact. The findings of this project are highly practical

and can assist people like me in making informed decisions when it comes to purchasing a home.

Several factors, such as monthly payments, total interest paid, and loan term length, were taken

into account to provide a comprehensive analysis of the available mortgage options. By breaking

down these factors, I was able to fully understand the financial implications of each option,

allowing me to make an informed decision on which mortgage to choose.

Another example is that the experience of doing this project could help me plan my

finances for buying a car. To compare different loan options offered by various lenders, I can use

mathematical techniques like loan formulas, interest rate calculations, and monthly payment

analysis. This will allow me to evaluate the total cost of financing each option over the loan term,

considering factors such as interest rates, loan terms, and down payment amounts.
 I can analyze the implications of choosing a longer-term loan with lower monthly

payments or a shorter-term loan with higher monthly payments. This will help me understand

how different variables affect the total cost of financing and make an informed decision that

aligns with my budget and financial goals.

In addition, I can explore the impact of making extra principal payments towards the car

loan, similar to the mortgage analysis. This will help me determine the most cost-effective

strategy for paying off the car loan while minimizing interest expenses. By assessing the

potential interest savings and accelerated loan payoff, I can make the best decision for my

finances.

If I were a mortgage broker, it would be important to explain the mortgage options to

clients. This helps clients make informed decisions about their mortgage financing and ensures

transparency. I will explain the differences between different mortgage options to my clients. I do

this by breaking down the distinctions between 30-year, 15-year, or 30-year payment plans with

extra payments. This helps my clients make informed decisions that best fit their financial

situation and long-term goals.

For example, a 30-year mortgage has a lower monthly payment but takes longer to pay

off. A 15-year mortgage has a higher monthly payment but saves money on interest in the long

run. A 30-year payment plan with extra payments can help pay off the mortgage faster without

increasing the monthly payment. Making extra payments towards the principal balance of their

mortgage can shave years off their mortgage term and save thousands of dollars in interest over

the life of their loan.

 When considering a mortgage plan, it's important to be aware of the different options

available and their corresponding advantages and disadvantages. Two of the most popular

mortgage plans are the 30-year plan and the 15-year plan.

The 30-year plan is known for its lower monthly payments, making it more affordable for

most homeowners. However, this lower payment comes with a catch: the borrower ends up

paying more in total interest over the course of the loan term. This is because the interest is

spread out over a longer period of time, resulting in more total interest paid.

The 15-year plan, on the other hand, requires higher monthly payments but offers

significant interest savings and faster equity accumulation. Because the loan term is shorter, the

borrower pays less interest overall. However, this plan may not be as feasible for some

homeowners due to the higher monthly payments.

A third option is the 30-year plan with extra payments. This plan strikes a balance

between the two plans, as it has lower monthly payments while still helping with faster loan

payoff and interest savings. By making extra payments, the borrower can save on interest and

pay off the loan faster, while still enjoying the affordability of a 30-year plan.

This project has further convinced me of the usefulness of math in real-world situations.

By utilizing math concepts such as loan formulas, percentages, and logarithms to analyze

mortgage options, I have come to appreciate how math can provide valuable insights into

complex financial decisions. In particular, I have learned how mathematical techniques can be

utilized to compare different mortgage terms, assess total costs, and understand the implications

of payment strategies. This project demonstrates that math isn't just theoretical; it has tangible

applications that can significantly impact financial outcomes and empower individuals to make
sound decisions in various aspects of their lives. Overall, I believe that math is an indispensable

tool for making informed decisions and navigating practical challenges.

As I was exploring my future career prospects and evaluating the financial implications

of different academic degrees, I came across some intriguing insights. I realized that it is

essential to plan my finances carefully, especially when considering the prospect of owning a

home. While researching the minimum annual gross salary required to afford a house, I

discovered that my income must be sufficient to cover housing expenses to maintain financial

stability without overextending myself. This analysis provided me with valuable information

about the critical role of well-informed decision-making in homeownership. I learned how my

career choices can significantly impact my financial well-being and the importance of taking a

holistic approach to financial planning.