Math 1030

Name _Jonathan Wilson_______

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 __$459,900______.

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

The down payment is __$91,980____. The amount of the mortgage is ____________.

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: ___Aspen Hills Mortgage________.

Rate for 15-year mortgage: ____3.250% APR_________. Rate for 30-year mortgage
___3.813% APR_________.

Name of second lending institution: _____First Internet Bank_________.

Rate for 15-year mortgage: ___3.250% APR________. Rate for 30-year mortgage
__3.804% APR____.

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: __$2,585/mo ___. 30-year monthly payment

___1,704/mo___.
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. . 11/25/17 $646.31 $249.11 $397.20 $91,582.80
2. . 12/25/17 $646.31 $248.04 $398.28 $91,184.52
50. . 12/25/21 $646.31 $192.82 $453.49 $70,743.12
90. . 4/25/25 $646.31 $141.01 $505.30 $51,559.98
120. . 10/25/27 $646.31 $98.30 $548.01 $35,747.49
150. . 4/25/30 $646.31 $51.98 $594.33 $18,598.49
180. . 5/25/31 $646.31 $2.12 $667.12 $0.00
total ------- ---------

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

The total amount paid is the number of payments times _____the payment amount___.

The total interest paid is the total amount paid minus _____the amount you paid___.

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 $___28,865.89_____ (more) than the mortgage.

The total amount of interest is ___63114.11_____% (less) than the mortgage.

The total amount of interest is __31____% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 11/25/17 $428.80 $291.58 $137.22 $91,842.78
2. . 12/25/17 $428.80 $291.14 $137.66 $91,705.12
60. . 10/25/22 $428.80 $263.40 $165.39 $82,927.45
120. . 10/25/27 $428.80 $228.82 $199.98 $71,981.76
240. . 10/25/37 $428.80 $136.43 $292.37 $42,744.53
300. . 10/25/42 $428.80 $75.28 $353.51 $23,395.47
360. . 10/25/47 $428.80 $1.35 $426.09 $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 $__52129.00___________ (less) than the mortgage.

The total amount of interest is ___91980.00__________% (more) than the mortgage.

The total amount of interest is ___57__________% 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
$__35,469.94________.

The total amount of interest paid with the $100 monthly extra payment would be
$___91980________ (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
____57_______% (more or less) than the interest paid for the scheduled payments only.
 The $100 monthly extra payment would pay off the mortgage in __21__ years and __4__
months; thats ___9___ 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

The amount of payments are obviously 15 years less than the 30 year mortgage, but makes for
higher monthly payments. I personally would go with the 30 year payment plan, however having
to spend more money on interest overtime, a difference of 26% more to be precise.

(2) the 15-year mortgage interest to the 30-year mortgage interest

The difference in interest between the 15 year mortgage and the 30 year mortgage was $28,866.
That is an important factor to consider when youre thinking of buying a house and thats what
makes doing these calculations ahead of time really nice, so that you dont have unexpected
things like high interest rates ruining your financial freedom in the future. It becomes a question
of how high of interest can I afford and where can I get the cheapest rates for the length of
mortgage payment plan I want.

(3) the 15-year mortgage to the 30-year mortgage with an extra payment

The extra payment allowed for a 9 year earlier finish. That would be nice for retirement since
you would no longer have a mortgage payment, and more of your money can be put towards
retirement during those high interest payout periods on your retirement savings plan interest
account.

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.

Having no idea what I want to do for a career, I dont know at the present time how much
income my wife and I will make in the future. I would have to account for only my
current job and salary and am not married yet so it makes calculating things like this
difficult. But overall better in the long run because now I know how to do so and it
makes for buying a house much smoother and more cost effective. So the factors that
would need to be considered is the maximum amount each month you would be able to
afford, based on your income and how much money you want spent on other things,
which can greatly influence your decision between 15 and 30 year mortgage plans.