Math 1030

Name: Aaron Olson

Buying a House

4322 S 1195 W UNIT 17B, Taylorsville, UT 84123

3 beds 1 bath 1,153 sqft

For Sale $154,500 Price cut: -$400 (10/20) Zestimate: $165,187

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 $154,900.00.

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

The down payment is $30,980.00. The amount of the mortgage is $123,920.

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: Cyprus Credit Union.

Rate for 15-year mortgage: 3.125%. Rate for 30-year mortgage 3.750%.

Name of second lending institution: American First Credit Union.

Rate for 15-year mortgage: 3.250%. Rate for 30-year mortgage 3.875%.

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: $863.24. 30-year monthly payment $573.89.

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 are many programs online available for this including Brett Whissles website:
http://bretwhissel.net/cgi-bin/amortize.

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. . 11/23/17 863.24 322.71 540.53 123,379.47
2. . 12/23/17 863.24 321.30 541.94 122,837.53
50. . 12/23/21 863.24 249.24 614.00 95,709.05
90. . 4/23/25 863.24 181.93 681.31 69,178.57
120. . 10/23/27 863.24 126.64 736.60 47,893.05
150. . 4/23/30 863.24 66.87 796.37 24,880.25
180. . 10/23/32 861.00 2.24 858.75 $0.00. .
total ------- 155,382.89 $31,462.89 92,457.11 ---------

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

The total amount paid is the number of payments times Payment Amount.

The total interest paid is the total amount paid minus The Principal Amount.

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 $322.71 (less) than the mortgage.

The total amount of interest is 74.6% (More) than the mortgage.

The total amount of interest is 25.4% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 11/23/17 573.89 387.25 186.64 123,733.36
2. . 12/23/17 573.89 386.67 187.23 123,546.13
60. . 10/23/22 573.89 349.53 224.37 111,623.81
120. . 10/23/27 573.89 303.33 270.56 96,796.11
240. . 10/23/37 573.89 180.46 393.43 57,354.16
300. . 10/23/42 573.89 99.46 474.43 31,353.55
360. . 10/23/47 572.11 1.79 570.32 $0.00. .
total ------- 206,601.42 82,681.42 41,238.57 ---------

Payment number 139 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $82,681.42 (less) than the mortgage.

The total amount of interest is 33.3% (less) than the mortgage.

The total amount of interest is 66.7% of the mortgage.

Suppose you paid an additional $100 a month towards the principal [If you are making extra
payments towards the principal, include it in the monthly payment and leave the number of
payments box blank.]

The total amount of interest paid with the $100 monthly extra payment would be
$60,709.22.

The total amount of interest paid with the $100 monthly extra payment would be
$60,709.22 (less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 33.27%
(less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 23 years and 2 months;
thats 84 months sooner than paying only the scheduled payments.
Summarize what you have done and learned on this project in a well written paragaph. Because
this is a math project, you must compute and compare numbers, both absolute and relative
values. 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

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.

1. The 15-year payment would be able to get you through paying off the loan much faster,
but you must maintain a specific budget of $863.24 each month whereas the 30-year
loan you would take longer, but you would have less money to budget only $572.11 to
keep in mind. A few things you will have to keep in mind is these are set amounts you
would have to also keep in mind other bills such as appliances, food, gas for cars, etc.
the more money you need to put towards bills the more likely you will need to keep an
eye on budgeting more.

2. The 15-year interest was $31,462.89 whereas the 30-year loan was $82,681.42. The
interest isnt really that bad to worry about since it is going to be included with the
principle amount. Interest isnt something that you tend to have to worry about as much.
You still need to keep in mind that you will have to still pay it off, but you just need to
remember to do so. The amount for the 15-year load is, of course, smaller than that of
the 30-year loan but the 30-year loan gives you a lot more time to get it all paid off but
you need to also pay for other expenses as well.

3. The 15-year loan compared to the 30-year loan with the $100.00 extra payment the, the
30-year loan would take you a few years longer, however the payment for it would still
be slightly cheaper than the 15-year loan. However even though it would be cheaper, the
time it takes to get it paid off is an 8-year difference between the two different payment
methods. The 15-year loan may still be easier to pay off if you have money, if not then
you will start to owe more for the payment next time.