Math 1050 Mortgage Project a Nemesele ai Te In this project we will examine a home loan or mortgage. Assume that you have found a home for sale and have agreed to a purchase price of $198,500. Down Payment: Assume that you are going to make a 10% down payment on the house. Determine the amount of your down payment and the balance to finance. f 1) Down oomefl IBS o Mortgage Amough / 736 50 Part I:_30 year Mortgage Monthly Payment: Calculate the monthly payment for a 30 year loan (rounding up to the nearest cent) by using the following formula. Show your work, [PMT is the monthly loan payment, P is the mortgage amount, r is the annual percent rate for the loan in decimal, and Y is the number of years to pay off the loan. For the 30 year Joan use an annual interest rate of 4.975%. 7 (a) 12 PMT = ——_, 1-(1+ #5) Monthly Payment for a 30 year mortgage Note that this monthly payment covers only the interest and the principal on the loan. It does not ‘cover any insurance or taxes on the property. “Amortization Schedule: In order to summarize all the information regarding the amortization of a loan, construct a schedule that keeps track of the payment number, the principal paid, the interest and the unpaid balance. A spreadsheet program is an excellent tool to develop an amortization schedule. We can use a free amortization spreadsheet on the web. The web address is: http://www. bretwhissel nevamortization/amortize.html. Enter the amount af the loan, i.e. the selling price minus the down payment, the interest rate, and the appropriate show the schedule. If you are making extra payments number of years. Check the box to sI towards the principal, include it in the monthly payment and leave the number of payments box blank.tse year mortgaee = Amortization Schedule monthly payment for 30 Yea" ealati Note: itis is more than ? or} eens different from Youre Total inteest pid overs0 yeas = B45 264! #1 Total amount repaid = WEY, 2.7, 41 that goes ‘ .d the amount cipal and te ales? Notice that the amo ards the pr yunt of the payment that goes tow’ towards the interest are not constant. What do you observe about €#¢? © nese Lv ola, BOA : : and principal than Find the number of the frst payment when more ofthe payment goes toward Prine!P interest. Pagnerp 194 F2 As already mentioned, these payments are for principal and interest only. You monthly payments for home insurance and property taxes. In addition, it is help! a money left over for those litte luxuries like electricity, running water, and food. Asa wise uld not exceed 35% of owner, you decide that your monthly principal and interest payment shot 5 Your monthly take-home pay. What minimum monthly take-home pay should you have in order to meet this goal? Show your work for making this calculation. oS x. SO.9D - eae Bs Ses x= 2772.23 will also have ful to have 35 Minimum monthly take home pay =” “75.7, 2 : It is also important to note that your net or take-home pay (afer taxes) is less than your gross pay (before taxes). Assuming that your net pay is 73% of your gross pay, what minimum gross annual salary will you need to make to have the monthly net salary stated above? Show your work for making this calculation. oe? 2 2 ? / 27527 27 ~ 102 ve YUM ler 4 “73 ee ae Minimum gross annual salaryr js £4%. ne the value of the home 10 years after purchase assuming a continuous interest rate 0! Se the full purchase price as the principal. Show your work. \ A = port = Pest A= 190 08 oUCin) A= fe 14127, 22 Assuming that you can sell the house for this amount, use the following information to calculate your gains or losses: Selling price of your houy Z_. & (27.202 5 Original down payment! 1938529, ‘ 5 Mortgage paid over the ten years_ PUY, 756 29 74?) SIYS 22 298 J The principal balance on your loan after ten years Do you gain or lose money over the 10 years? How much? Show your amounts and summarize your results:‘art IIT: _15 year Mortgage Part IM: 15 y rigage year mortgage. 8 the same purchase price and down payment, we will investigate 15 Monthly Pay yunding up to the yyment: Calculate the monthly payment for a 15 year loan (rounctOe earest cent) by using the flowing forma, Show your work. (PMI isthe monthly 1080 ee Ps the mortgage amount, ris the annual percent rate for the loan in decimal, and Y is numberof yeast pay off th loan, For the 18 Joa loan use an annua interest ae oF 4.735%, 0 735 7 x 704. 13128 Pee irabde ( oe) - PMT = 5 (a) SS | S07 791273; -(1+ 4) i- (i+ cae) . ’ 14335! Monthly Payment for a 15 year mortgage A349 Use the amortization 5 spreadsheet on the web this ti ins numberof payments fore 18 yea Toan, nen ns Hime entering he ites te = eae Schedule monthly payment for a 15 year mortgage = 133% . 7! : if this is more than 2 or 3 cents different from your calculation, check your numbers!) Total interest paid over 15 yeas=_7/)22 7.82 77 - 49 377.382 Total amount repaid = _'7 Find the number of the first payment when more of the payment goes toward principal than, interest. . LY Vreen Kod Suppose you paid an additional $100 towards the principal each month, How long would it take to pay off the loan with this additional payment? Z. ynietAa (6% A> 3 aphpre rab aakey What is the total amount of interest paid over the life of the loan? POL I3 292 ¢ Compare this total amount repaid to the total amount repaid without any extra payments. How much more or less would you spend if you made the extra principal payments? 2 247, 377,32 2 uty bs A,2¢ DHOSdPann E Reflection Did this S Project What ideas char M2MRE the "88 chan, Ie Way Project gave &, i era hy ete pratt Jeet did not chan; °¢ 10 support Tox Your existing opinion about buying a home. Be specific. o M . P- fg cL oon ee 4 z f yan : APA Ze a “ een eee buypey 2 But ohe AE poe Aer peitedhe mer {é itl, - yy. Cae be 4 onde, en ta Mees - Ye Peg ee ag Wh a Dror ey SH Cf p2Meike yg ohh nf merge P Wher 40 epres ter for aes : < ood yee inated, Coit, Lo proty wel getty tben ple 2 CC