Math 1030

Name Jaxon Olsen

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.

https://www.utahrealestate.com/1446289 (link to the listing)

The listed selling price is $339,000.00.

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

The down payment is 67,800.00. The amount of the mortgage is $271,200.00.

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: Security Service Federal Credit Union.

Rate for 15-year mortgage: 2.75%. Rate for 30-year mortgage: 3.375%.

Name of second lending institution: America First Credit Union.

Rate for 15-year mortgage: 3.375%. Rate for 30-year mortgage: 3.75%.

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: $1,840.42 30-year monthly payment $1,198.96

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 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.

15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 7/7/17 $1840.42 $621.50 $1,218.92 $269,981.08
2. . 8/7/17 $1840.42 $618.71 $1,221.72 $268,759.36
50. . 8/7/21 $1840.42 $476.82 $1,363.60 $206,703.12
90. . 12/7/25 $1840.42 $346.07 $1,494.35 $149,518.56
120. . 6/7/27 $1840.42 $239.85 $1,600.58 $103,059.77
150. . 12/7/30 $1840.42 $126.07 $1,714.35 $53,298.50
180. . 6/7/32 $1840.42 $4.21 $1,832.01 $0.00. .
total ------- $1840.42 $60,075.94 $339,000 ---------

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

The total principal paid is the same as the beginning loan amount.
 The total amount paid is the number of payments times the principal, plus interest.
The total interest paid is the total amount paid minus the principal.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number one is the first one in which the principal paid is greater than the interest
paid.

The total amount of interest is $211,124.06 less than the mortgage.

The total amount of interest is 77.85% less than the mortgage.

The total amount of interest is 22.15% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 7/7/17 $1,198.96 $762.75 $436.21 $270,763.79
2. . 8/7/17 $1,198.96 $761.52 $437.44 $270,362.34
60. . 6/7/22 $1,198.96 $684.13 $514.83 $242,732.61
120. . 6/7/27 $1,198.96 $589.64 $609.33 $209,040.21
240. . 6/7/37 $1,198.96 $345.44 $853.53 $121,968.27
300. . 6/7/42 $1,198.96 $188.78 $1,010.19 $66,110.32
360. . 6/7/47 $1,198.96 $3.36 $1,192.24 $0.00. .
total ------- $1,198.96 $160,427.37 $339,000 ---------

Payment number 115 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $110,772.63 less than the mortgage.

The total amount of interest is 40.85% less than the mortgage.

The total amount of interest is 59.15% 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
$138,017.47.

The total amount of interest paid with the $100 monthly extra payment would be $22,409.90
less than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 14% less
than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 26 years and four months;
thats 44 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 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 submission must be in pdf format. Refer to the assignment rubric to see how you'll be
graded.

The biggest thing that I noticed was that the 15 year mortgage was not only paid off quicker,
but it had a considerably less amount of interest than the 30 year. The 30 year mortgage was
causing me to pay over $600 consistently for the first 60 months to just my interest, which is still
more than what was going to my principal. Paying an additional $100 on my 30 year every
month made me finish my loan early at 316 months. It does save money, as I finish my loan 44
months sooner. I pay off an average of about $3 per month in interest, however, the 15 year loan
is still better. If I paid an additional $100 on my 15 year loan I end up finishing my loan 11
months sooner, and the amount of money that goes to my principal increases. I have less interest
per payment, which varies each month. Sometimes the interest will be $6-$7 cheaper than the
previous month, but will then only be $3-$4 cheaper the next. The 15 year mortgage ends with
$60,075.94 in interest, versus the $160,427.37 from the 30 year. If you add in the additional $100
per month, the 15 year gains $56,089.40 in interest versus the $138,017.47 that the 30 year gains
in interest. Youre almost paying for another house with the 30 year, so if you can avoid it,
always do the 15 year mortgage plan.