Math 1030

Name ____William Bailey______

Buying a House

Select a house from a real estate booklet, newspaper, or website. Find something reasonable
between $100,000 and $350,000. In reality, a trained financial professional can help you
determine what is reasonable for your financial situation. Take a screen shot of the listing for
your chosen house and attach it to this project. Assume that you will pay the asking price for
your house.

The listed selling price is ___200000_________.

Assume that you will make a down payment of 20%.

The down payment is 40000. The amount of the mortgage is 160000.

Ask at least two lending institutions for the interest rate for both a 15-year and a 30-year fixed
rate mortgage with no points or other variations on the interest rate for the loan.

Name of first lending institution: University Federal credit Union.

Rate for 15-year mortgage: 3.24. Rate for 30-year mortgage 4.019.

Name of second lending institution: Zions Bank.

Rate for 15-year mortgage: 3.56. Rate for 30-year mortgage 4.077.

Assuming that the rates are the only difference between the different lending institutions, find the
monthly payment at the better interest rate for each type of mortgage.

15-year monthly payment: 1123.49 30-year monthly payment 763.00

These payments cover only the interest and the principal on the loan. They do not cover the
insurance or taxes.

To organize the information for the amortization of the loan, construct a schedule that keeps
track of: (1) the payment number and/or (2) the month and year (3) the amount of the payment,
(4) the amount of interest paid, (5) the amount of principal paid, and (6) the remaining balance.
There is a Loan Amortization schedule in CANVAS.

Its not necessary to show all of the payments in the tables below. Only fill in the payments in
the following schedules. Answer the questions after each table.
15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . Aug 2017 1123.49 432.00 691.49 159,308.51
2. . Sept 2017 1123.49 1290.39 1388.59 158,615.15
123,036.38
50. . Oct 2021 1123.49 19543.07 37,063.54

90. . Feb 2025 1123.49 31015.95 70,530.34 89,659.80

120. . Aug 2027 1123.49 36974.51 98,108.75 62,155.76
150. . Feb 2030 1123.49 40945.15 128,010.69 32334.44
180. . Jul 2032 1123.49 42228.66 160,000.00 $0.00. .
total ------- ---------

Use the proper word or phrase to fill in the blanks.

The total principal paid is the same as the _______loan_______________.
The total amount paid is the number of payments times ____the amount of
months_____________________.
The total interest paid is the total amount paid minus ______the original mortgage
amount_____________________.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number _____ is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $____117772_________ (more or less) than the

mortgage.

The total amount of interest is _____.736074________% (more or less) than the

mortgage.

The total amount of interest is ___.263926__________% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 763.00 535.87 227.13 159772.87
2. . 763.00 535.11 227.89 159544.97
60. . 763.00 501.62 276.67 144934.04
120. . 763.00 443.56 319.44 132118.33
240. . 763.00 477.14 285.86 84875.44
300. . 763.00 179.86 583.14 53120.32
360. . 763.00 50.32 712.68 $0.00. .
total ------- ---------

Payment number _____ is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $____114680_________ (more or less) than the mortgage.

The total amount of interest is ______.28352_______% (more or less) than the mortgage.

The total amount of interest is _____.71675________% of the mortgage.

Suppose you paid an additional $100 a month towards the principal

The total amount of interest paid with the $100 monthly extra payment would be
$_____90376.33_____.

The total amount of interest paid with the $100 monthly extra payment would be
$_____24304______ (more or less) than the interest paid for the scheduled payments
only.

The total amount of interest paid with the $100 monthly extra payment would be
___.00003________% (more or less) than the interest paid for the scheduled payments
only.

The $100 monthly extra payment would pay off the mortgage in _24___ years and __4__
months; thats __69____ months sooner than paying only the scheduled payments.
Summarize what you have done and learned on this project. Because this is a math project, you
must compute and compare numbers, both absolute and relative values, that havent been
compared above. Statements such as a lot more and a lot less do not have meaning in a
Quantitative Reasoning class. Make the necessary computations and compare (1) the 15-year
mortgage payment to the 30-year mortgage payment, (2) the 15-year mortgage interest to the 30-
year mortgage interest, (3) the 15-year mortgage to the 30-year mortgage with an extra payment,
and (4) the 15-year mortgage to the 30-year mortgage with a large enough extra payments to
save 15 years and have the loan paid off in 15 years. Also, keep in mind that the numbers dont
explain everything. Comment on other factors that must be considered with the numbers when
making a mortgage.

Your submission must be in pdf format. Refer to the assignment rubric to see how you'll be
graded.

1 The difference between the 15 year and the 30 year have both there ups and downs. The
fact that you would be paying almost 60000 more in interest even with the payments
being 300 less your money would actually be going more to the principal with the 15
year loan then the 30 year loan. I have learned that interest plays a much larger role in a
moregage then I once thought. For the 30 year loan you pay 90000 dollars in interest
which is more then half of the mortgage.