Math1030Project1

1) Iamcurrentlyintheprocessofapplyingandinterviewingforgradschoolforthecareer
ofaCardiovascularPerfusionist.
2) Expectedstartingsalaryisaround$88,750ayearbasedonthiswebsite:
http://www.healthassistancepartnership.org/perfusionistsalary/
3) Iusedazillow.comcalculatorandbasedonmyannualincomeof$88,750andmonthly
debtsof$1,000anda$54,000downpayment,Icanaffordahouseupto$272,981.
4) IwouldliketopurchaseahomeinBountiful,UT
5) Thishomewaslistedon05/24/16.Description:2Story,4beds,3baths,2,508sqft,
singlefamilybuiltin1995
Picture:

Cost:$270,000

Thelistedsellingpriceis$270,000.Assumethatyouwillmakeadownpaymentof20%.The
downpaymentis$54,000.
Theamountofthemortgageis259,246.80.
Askatleasttwolendinginstitutionsfortheinterestrateforbotha15
yearanda30
yearfixed
ratemortgagewithnopointsorothervariationsontheinterestratefortheloan.Nameof
firstlendinginstitution:WellsFargo.
Ratefor15
yearmortgage:2.875%.
Ratefor30
yearmortgage3.625%.
Nameofsecondlendinginstitution:AmericaFirstCreditUnion.
Ratefor15
yearmortgage:2.5%.
Ratefor30
yearmortgage3.25%.

Assumingthattheratesaretheonlydifferencebetweenthedifferentlendinginstitutions,find
themonthlypaymentatthebetterinterestrateforeachtypeofmortgage.

AmericaFirstCreditUnion:

$270,000x.20%=54000.270,00054000=$216000loanamount.

216000=X[1(1+.025/12)^12x15]/(.025/12)
216000=.3124x/.002083

15yearmonthlypayment=$1440.26

216000=X[1(1+.0325/12)^12x30]/(.0325/12)
216000=.6223x/.00271

30yearmonthlypayment=$940.64

PART2

15yearmortgage:

Payment
Number

Payment
Date

Payment
Amount($)

InterestPaid
($)

Principal
Paid($)

Remaining
Balance($)

1.

8/1/2016

1,440.26

450.00

990.26

215,009.74

2.

9/1/2016

1,440.26

447.94

992.33

214,017.41

50.

9/1/2020

1,440.26

343.69

1,096.58

163,873.18

90.

3/1/2023

1,440.26

273.04

1,167.22

118,085.00

120.

7/1/2026

1,440.26

171.71

1,268.55

81,153.74

150.

1/1/2029

1,440.26

89.99

1,350.28

41,843.16

180.

7/1/2031

1,440.26

2.99

1437.27

$0.00

Total

259,246.80

43,247.64

216,000.00

215,009.74

Thetotalprincipalpaidisthesameastheloanamount.
Thetotalamountpaidisthenumberofpaymentstimesthemonthlypayment(1440.26)
Thetotalinterestpaidisthetotalamountpaidminustheloanamount.

Theprincipalpaidisalwayslargerthantheinterestpaid.
Thetotalamountofinterestis$215,999.16lessthanthemortgage
Thetotalamountofinterestis83%lessthanthemortgage
Thetotalamountofinterestis17%ofthemortgage

30yearmortgage

Payment
Number

Payment
Date

Payment
Amount($)

InterestPaid
($)

Principal
Paid($)

Remaining
Balance($)

1.

8/1/2016

940.05

585.00

355.05

215,644.95

2.

9/1/2016

940.05

584.04

356.01

215,288.95

60.

7/1/2021

940.05

523.57

416.47

192,902.60

120.

7/1/2026

940.05

450.19

489.85

165,735.66

240.

7/1/2036

940.05

262.37

677.67

96,198.83

300.

7/1/2041

940.05

142.97

797.07

51,993.67

360.

7/1/2046

940.05

2.54

937.51

0.00

Total

338,418.00

$122,418.00

216,000

Paymentnumber105isthefirstoneinwhichtheprincipalpaidisgreaterthantheinterestpaid
Thetotalamountofinterestis$216,000lessthanthemortgage
Thetotalamountofinterestis64%lessthanthemortgage
Thetotalamountofinterestis36%ofthemortgage

$20,552.00

Thetotalamountofinterestpaidwiththe$100monthlyextrapaymentwouldbe$101,866.
Thetotalamountofinterestpaidwiththe$100monthlyextrapaymentwouldbe$20,552.00
lessthantheinterestpaidforthescheduledpaymentsonly.

Thetotalamountofinterestpaidwiththe$100monthlyextrapaymentwouldbe17%lessthan
theinterestpaidforthescheduledpaymentsonly.
The$100monthlyextrapaymentwouldpayoffthemortgagein25yearsand6monthsthats
54monthssoonerthanpayingonlythescheduledpayments.

PART3

1) Intheveryend,theamountyoupaytotheagencywiththe15yearmortgagepaymentis
$79,171.20(23%)lessthanthe30year.Itsmonthlypaymentisalso$500.21more.
2) Ifyoumake$100paymentsinthe30yearplan,itis$58,619.20morethanthe15year
plan,makingthe15yearplan18%less.
3) Thetotalinterestofthe15yearmortgageis$79,170.36(35%)lessthanthe30years.
4) Ifyouweretopaythe30yearmortgagewithextrapaymentsof$580makingtheloan
endin15years,thentheinterestwouldbe$22,087.77morethanthe15year.Your
monthlypaymentswouldbe$1520.05.

Otherfactorsobviouslyincluderepairsand/orupgradesmadetothehome,andanyother
unexpectedfactors.IfIweretobuythishome,Iwouldwanttogowiththe15yearplan.IfIwas
abletoaffordextrapayments,Iwouldmakethemtothatplan,buttheextrapaymentstomake
the30yearplanlast15yearsisnotworthit.Theinterestrateofthe15yearplanmakesabig
differenceinthelongrun.RentingwouldbeagoodoptionifIwasntplanningonbeinginthe
areaforalongtime,butonceIhadarocksolidjobandwasinanareaIknewIwantedtostay
in,buyingahomeandpayingamortgageisfarbetter,sincethepaymentsarethesame/lower
anditactuallygoestowardpurchasingthehomewhichcouldlaterbesoldandetc.etc.