Math 1030

Name Emilio Cruz

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 ____$299,000.00________.

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

The down payment is __$59,800_. The amount of the mortgage is $239,200.

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: ________Sebonic Financial__________.

Rate for 15-year mortgage: _3.035%_. Rate for 30-year mortgage_3.668%_.

Name of second lending institution: ________Consumer Direct Mortgage______.

Rate for 15-year mortgage: _3.250%_. Rate for 30-year mortgage _3.875%_.

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: $1,655.90 30-year monthly payment $1,096.67

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 are many programs online available for this including Brett Whissles website:
http://bretwhissel.net/cgi-bin/amortize.
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. . 11/30/17 $1,655.90 $604.98 $1,050.92 $238,149.08
2. . 12/30/17 $1,655.90 $602.32 $1,053.58 $237,095.49
50. . 12/30/21 $1,655.90 $466.51 $1,189.39 $183,262.02
90. . 4/30/25 $1,655.90 $340.05 $1,315.85 $133,136.54
120. . 10/30/27 $1,655.90 $236.46 $1,419.44 $92,075.06
150. . 4/30/30 $1,655.90 $124.72 $1,531.18 $47,781.04
180. . 10/30/32 $1,651.72 $4.18 $1,647.55 $0.00
total ------- ---------

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

The total amount paid is the number of payments times $298,062.13

The total interest paid is the total amount paid minus $58,862.13

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 $180,337.87 (less) than the mortgage.

The total amount of interest is 73.3 % (less) than the mortgage.

The total amount of interest is 24.6 % of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 11/30/17 $1,096.67 $731.15 $365.52 $238,834.48
2. . 12/30/17 $1,096.67 $730.04 $366.63 $238,476.85
60. . 10/30/22 $1,096.67 $659.04 $437.63 $215,169.26
120. . 10/30/27 $1,096.67 $571.09 $525.58 $186,309.34
240. . 10/30/37 $1,096.67 $338.63 $758.05 $110,025.03
300. . 10/30/42 $1,096.67 $186.29 $910.38 $60,035.44
360. . 10/30/47 $1,093.33 $3.34 $1,089.99 $0.00
total ------- ---------

Payment number #135 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $155,601.93 (less) than the mortgage.

The total amount of interest is 34.9 % (less) than the mortgage.

The total amount of interest is 65.05 % of the mortgage.

Suppose you paid an additional $100 a month towards the principal [If you are making extra
payments towards the principal, include it in the monthly payment and leave the number of
payments box blank.]

The total amount of interest paid with the $100 monthly extra payment would be
$130,995.87

The total amount of interest paid with the $100 monthly extra payment would be
$24,606.06 (less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 54.75%
(less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 25 years and 10 months;
thats 50 months sooner than paying only the scheduled payments.
Summarize what you have done and learned on this project in a well written paragraph. Because
this is a math project, you must compute and compare numbers, both absolute and relative
values. 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

(15) $1,655.90 (30) $1,096.67 = $559.23 [A month/difference]

(30) $394,801.20 (15) $298,062 = $96,739.20

(2) the 15-year mortgage interest to the 30-year mortgage interest

(15) $180,337.87 (30) $155,601.93 = $24,735.94

(3) the 15-year mortgage to the 30-year mortgage with an extra payment

(15) 1,755.90 (30) $1,196.67 = $559.23 [A month/difference]

(30) $430,801.20 (15) $316,062 = $114,739.20

Keep in mind that the numbers dont explain everything. Comment on other factors that must be
considered with the numbers when making a mortgage.

From this project, Ive learned there can be significant and somewhat slight differences
when comparing finances between 15 to 30 year mortgages. Although you will pay more
monthly, but less mortgage overall, 15-year mortgages are ideally cheaper but not everyone has
the income to pay extra. This is definitely a learning experience especially for someone whos
not experienced with financing mortgages and looking into buying a home in the future. Price
comparison between longer and shorter times gives me a better look at how Id want to finance a
mortgage.