Jocelyn Ortiz

N. Meyer

Math 1030

21 Jan. 2021

Reflective Writing for Mortgage Project

In this lab I calculated many prices that are tied to mortgages. In part one of this lab, I

calculated the down payment and loan amount of a home. I found the interest rate in decimal

form, and calculated the monthly payment using a formula. In this part I also calculated the

income needed to afford the monthly payments. In part two I found the future value of the home

using a compound interest formula. I also found the amount of money I would gain if I sold the

house after 10 years. In part three this lab focused on year mortgage. I found the difference in

monthly payments with a 15 year loan vs a 30 year one. I found that a 15 year loan saves more

money than a 30 year one. In part 4 I found out that paying extra in a monthly payment results in

paying off the loan quicker. It also is a good alternative because you pay less interest in the long

run but still have the chance to pay the regular monthly payment if you need to.

I think that this project shows how math can be applied to the real world because this lab

showed the difference between different loans and payments without having to go through them

in real life. The formulas allowed me to find out payments and compare them without actually

having to pay anything. A person could use this to their advantage to see what type of loan works

best for them. Being aware of the differences that lower interests rates have allows homeowners

to be more financially aware and spend less money than they need to.

Another example of another application where this type of analysis would be beneficial is

with car loans. Car loans and mortgages are very similar but car loans aren’t as expensive as
homes are. Also, cars decrease in value whereas homes increase in value overtime. Nonetheless,

the monthly payments are similar and you can apply the same formula to many aspects of both.

Someone could use the same formulas to see how much money they could save if they get a 36

month car loan vs a 60 month one. Cars monthly payments have interest just like homes do and

the higher the interest the more you pay. If someone is financially aware and decides to purchase

a car, they can apply their knowledge and spend less money. For example, they can pay more

than the minimum monthly payment to shorten their loan and pay less interest.

If I were a mortgage broker it would be important to explain the details of this project to

clients because the clients could see what works best for them. For example, if a client isn’t able

to afford a high monthly payment they could get a longer loan for 30 years. But if the client

wants to pay less interest then I could let them know that a 15 year loan would make them pay

less interest. Overall it would just help the clients make the best decision that works for them. If

they’re financially aware then they become more financially responsible and don’t make the

mistake of purchasing a home they can’t afford. Also, it would be helpful since they would know

not to let the monthly payments be more than 35% of their net income

With a 30 year loan, the monthly payments are lower but you end up paying more interest

over time. With a 15 year loan, the monthly payments are higher but you end up paying less

interest over time. In the long run you’ll end up paying less for the house with the 15 year loan

then a 30 year one. But for people who don’t have enough money to make a higher monthly

payment, the 30 year loan is the better option. Luckily, they can make more than the minimum

monthly payment to pay off the loan faster too.

This assignment changed my opinion of the usefulness in math. Before hand, I had

always wondered how math was beneficial in a day-to-day use. But now I have realized that
math can be applied to real world situations and is extremely helpful when it comes to finances.

Now I know that I can calculate certain payments such as mortgages and car loans which is

something that I will be doing in the future. Also, now that I’m more familiar with mortgages

and loans, I won’t make the mistake of getting myself into something that could potentially lead

me to go bankrupt or lose money. I’ve considered getting a car this year because I’m going to

college and will need to drive there. Now I know how to calculate what car I can afford based on

my monthly income. It’s also great that I’m aware of these formulas because I can share them

with others and that way we don’t get ourselves into situations that are hard to get out of, since

not being financially stable is a very difficult lifestyle.

I found out that the minimum annual gross salary I’ll need in order to afford a home in

Utah is $61,840. The career I want to go into—environmental science— pays on average

$52,000 a year. This means that I will need a higher paying job in order to afford a home. If I

have a roommate I will be able to afford a home as long as our salaries combined are enough to

buy one. This also made me reflect on what I want to do and made me consider becoming an

environmental engineer, which is related to the area I want to study and also has an annual salary

of $62,000 per year. Which would be just enough to own a home in the future on my own. This

lab definitely made me more aware of finances and I will put my knowledge into use.