Math 1030

Name: Madeline Roy

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 $295,000.

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

The down payment is $59,000 the amount of the mortgage is $236,000

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: Wells Fargo

Rate for 15-year mortgage: 3.625% Rate for 30-year mortgage 4.375%

Name of second lending institution: America First Credit Union

Rate for 15-year mortgage: 3.25% Rate for 30-year mortgage 4.125%

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: $1658.30 30-year monthly payment $1443.09

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. . 11/22/17 $1658.30 $639.17 $1019.13 $234,980.87
2. . 12/22/17 $1658.30 $636.41 $1021.89 $233,958.98
50. . 12/22/21 $1658.30 $494.74 $1163.55 $181,510.94
90. . 4/22/25 $1658.30 $361.80 $1296.50 $132,291.31
120. . 10/22/27 $1658.30 $252.22 $1406.08 $91,720.03
150. . 4/22/30 $1658.30 $133.37 $1524.93 $47,719.54
180. . 10/22/32 $1653.82 $4.48 $1649.34 $0.00. .
total ------- $298,493.69 $62,493.69 $236,000 ---------

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

The total principal paid is the same as the loan amount
The total amount paid is the number of payments times interest percentage.
The total interest paid is the total amount paid minus principal paid.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number 1 is the first one in which the principal paid is greater than the interest
paid.

The total amount of interest is $62,493.69 more than the mortgage.

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

The total amount of interest is 26.5% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 11/22/17 $1143.09 $810.27 $332.82 235,667.18
2. . 12/22/17 $1143.09 $809.12 $333.96 235,333.21
60. . 10/22/22 $1143.09 `$735.68 $407.41 213,867.09
120. . 10/22/27 $1143.09 $642.66 $500.43 186,680.80
240. . 10/22/37 $1143.09 $388.05 $755.04 112,269.50
300. . 10/22/42 $1143.09 $215.66 $927.43 61,886.47
360. . 10/22/47 $1139.18 $3.91 $1135.27 $0.00. .
total ------- $411,511.64 $175,511.64 $236,000 ---------

Payment number 159 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $175,511.64 more than the mortgage.

The total amount of interest is 1.35% less than the mortgage.

The total amount of interest is 74% 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
$146,644.18

The total amount of interest paid with the $100 monthly extra payment would be
$28,867.46 less than the interest paid for the scheduled payments only.

.The $100 monthly extra payment would pay off the mortgage in 25 years and 7 months;
thats 52 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.

After doing this assignment, I have never been so glad excel exists! I looked at two different
institutions for mortgage loan rate, and I think with how low the rates were you would have to be
the perfect candidate to have the rates be that low. When I was entering the data to compare the
15 vs 30-year loans, I was shocked at the difference in everything. Even though the monthly
payments were higher for the 15 year loan, the amount of interest you end up paying and the
length of time make all the difference if you can afford to just go with the shorter loan. Looking
at the 30-year loan made me never want to buy a house, seeing the $175,511.64 paid in interest
blows my mind. I was also interested in the extra payment each month and how drastically it
changed the loans. Especially on the 30-year loan it cuts the interest paid total from $175,511.64
to about $146,644.18and sheds a good 4 years off the loan length! Doing this assignment made
me want to investigate my own car loan with the excel document, and made me excited to use
this information in the future for when I am ready to buy a house, not only is knowing these facts
about owning a home important, I think it made me realize how important a having a good down
payment is when purchasing a house. I better start saving now ha. I now know that it is very
important to seek out your options when considering buying a house, and even though the initial
cost for the shorter mortgage is more money, it may be worth it in the end, because you wont be
paying so much in interest.