Math 1030 Travis Howey

Name ______________________________

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 ______$316,490_____.

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

The down payment is _______$63,298_____. The amount of the mortgage is

______$253,192______.

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: ________Quicken Loans__________________.

Rate for 15-year mortgage: _____3.125%_______. Rate for 30-year mortgage

______3.875%______.

Name of second lending institution: ___________Wells Fargo________________.

Rate for 15-year mortgage: _______3.375%_____. Rate for 30-year mortgage

________4%____.

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: _______$1,764_____. 30-year monthly payment

____$1,085________.

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 sschedule 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 Paid Principal Remaining

Number Date Amount ($) ($) Paid ($) Balance ($)
1. . 7/2/2017 $235,192 $612.48 $1,025.89 $234,166.11
2. . 8/2/2017 $234,166.11 $609.81 $1,028.56 $233,137.55
50. . 8/10/2021 $181,649.48 $473.05 $1,165.32 $180,484.15
90. . 11/22/2024 $132,589.46 $345.29 $1,293.08 $131,296.37
120. . 5/11/2027 $92,295.87 $240.5 $1,398.02 $90,897.85
150. . 10/27/2029 $48,732.53 $126.91 $1,511.46 $47,221.07
180. . 4/14/2032 $1,634.11 $4.26 $1,634.11 $0.00. .
total ------- ---------

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

The total principal paid is the same as the ______The mortgage________.
The total amount paid is the number of payments times _________________.
The total interest paid is the total amount paid minus ___________________________.

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 175,477.50___ (less) than the mortgage.

The total amount of interest is ______25.39_______% (less) than the mortgage.

The total amount of interest is _______25.39______% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Paid Principal Remaining

Number Date Amount ($) ($) Paid ($) Balance ($)
1. . 7/2/2017 $235,192 $759.47 $346.49 $234,845.51
2. . 8/2/2017 $234,845.51 $758.36 $347.60 $234,497.91
60. . 6/6/2022 $212,712.01 $686.88 $419.08 $212,292.93
120. . 5/11/2027 $185,015.39 $597.45 $508.51 $184,506.88
240. . 3/19/2037 $110,928.17 $357.24 $748.72 $109,879.45
300. . 2/21/2042 $61,145.44 $197.45 $908.51 $60,236.93
360. . 1/26/2047 $1,102.40 $3.56 $1,102.40 $0.00. .
total ------- ---------

Payment number 147 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $___107,682.27______ (less) than the mortgage.

The total amount of interest is _____54.22_____% (more) than the mortgage.

The total amount of interest is _______54.22____% 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
$_____148,629.83_____.

The total amount of interest paid with the $100 monthly extra payment would be
$___14,323.77__ (less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
_____.088__% (less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in _26__ years; thats
___4___ 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
30year 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.

This project was very interesting. My brother and sister in law are currently looking for houses so
now I know what they are going through. The 15 year mortgage rate as compared to the 30 year
rate are very interesting. In the 15 year loan you are only paying an extra $287.26 per month
more, but you end up paying $147,366.24 less. Thats a huge difference, and it makes a big
difference. The issue is that the monthly payment can still be too much to pay the extra $287.26
so it may not be a viable option. I think that the interest rates differing so much is pretty crazy
even though the difference is only .25%, in the whole scheme of things, that translates to a
$112,174.24 difference through the 30 years. I think that the extra payment is also a viable
option. When you pay the extra money, you end up paying less money, over a shorter amount of
time. It is a good compromise between the 30 and 15 year loans. Youre paying 4 less years, and
$14,323.77 less in interest. If you wanted to pay the 30 year loan in only 15 years, you would
have to pay $810 extra per month. Thats quite a bit more than the $287.26 that you would be
paying with the 15 year payment.

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