Name __Alicia Mickelson_

Instructor: Brenda Gardner

Math 1030 Online

Buying a House
1. 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.

a. The listed selling price is ____235,000________.

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

b. The down payment is __11,750__________.

c. The amount of the mortgage is ____223,250________.

2. 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: ____America First Credit Union____.

Rate for 15-year mortgage: __3.25%__. Rate for 30-year mortgage ___4.125%_.

Name of second lending institution: _____Wells Fargo___.

Rate for 15-year mortgage: _3.625%__. Rate for 30-year mortgage __4.25%___.

3. 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. Show your steps (attach if needed). Note: These monthly payments cover
only the interest and the principal on the loan. They do not cover the insurance or taxes.

15-year monthly payment: _1568.71__.

30-year monthly payment _1081.98__.

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.

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 1/2017 1568.71 604.64 964.07 222,285.93
2. . 2/2017 1568.71 602.02 966.69 221,319.24
50. . 3/2021 1568.71 465.03 1103.68 170,600.95
90. . 6/2024 1568.71 338.93 1229.78 123,914.24
120. . 1/2027 1568.71 234.99 1333.72 85,430.81
150. . 7/2029 1568.71 122.26 1446.45 43,694.65
180. . 1568.71 0 1568.71 $0.00. .
total ------ 223,250.00 59,117.34 223,250.00 ---------
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15-year mortgage

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

a. The total principal paid is the same as the __loan amount______.
b. The total amount paid is the number of payments times _payment amount__.
c. The total interest paid is the total amount paid minus __3.25%_____.

5. Use the proper number to fill in the blanks and cross out the improper word in the
parentheses.
a. Payment number ___1__ is the first one in which the principal paid is greater than
the interest paid.
b. The total amount of interest is $__59,117.34_ more than the mortgage.
c. The total amount of interest is ___3.25_% more than the mortgage.
d. The total amount of interest is ___3.78_% of the mortgage.
Now look at the amortization schedule for the 30-year mortgage and answer the following
questions.

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 1081.98 767.42 314.56 222935.44
2. . 1081.98 766.34 315.64 222,619.80
386.47
60. . 1081.98 695.51 201942.48
120. . 1081.98 607.15 474.83 176149.98
240. . 1081.98 365.21 716.77 105526.32
300. . 1081.98 201.34 880.64 57690.60
360. . 1081.98 3.71 1074.94 $0.00. .
total ------ 223250 166263.17 223250 ---------
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6. Use the proper number to fill in the blanks and cross out the improper word in the
parentheses.
e. Payment number _159____ is the first one in which the principal paid is greater than
the interest paid.
f. The total amount of interest is $_166263.17 more than the mortgage.
g. The total amount of interest is __4.125___% more than the mortgage.
h. The total amount of interest is __4.125__% of the mortgage.

7. 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
$__137629.68_.

The total amount of interest paid with the $100 monthly extra payment would be
$__28633.49_ less than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
___5.8_% less than the interest paid for the scheduled payments only.
 The $100 monthly extra payment would pay off the mortgage in _4_ years and _7_
months; thats _55__ months sooner than paying only the scheduled payments.

8. 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.
Your assignment must be uploaded as a PDF. Refer to the assignment rubric to see how you'll
be graded.

This project has shown me how to calculate interest (and since I couldnt figure out the
amortization table at first, I learned how to calculate the monthly interest paid as
well).

The difference in the amount of interest paid in a 15 year mortgage and a 30 year
mortgage for a loan of $223,250.00 was $107,145.83! The difference in payment
was $486.73 additional for the 15 year mortgage vs the 30 year mortgage.

In order to get the 30 year mortgage paid off in 15 years you would have to make
payments of $1681.98 but you would save $90,874.75 in interest if you could pay it
off that fast. Going this route would cost $113.27 per month more than if you would
have just gone with the 15 year mortgage. If you took this route you would still be
paying $16271.08 more for interest versus going with the 15 year mortgage.