Math 1030

Name: Cambria Sorensen

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 $309,000.

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

The down payment is $61,800. The amount of the mortgage is $247,200.

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: Mountain America Credit Union.

Rate for 15-year mortgage: 3.125%. Rate for 30-year mortgage 3.750%.

Name of second lending institution: America First Credit Union.

Rate for 15-year mortgage: 3.25%. 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: $1,722.02 30-year monthly payment $1,144.82.

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 sschedule 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. . 11/17/17 $1722.02 $645 $1078 $246,122
2. . 12/17/17 $1722.02 $642 $1081 $245,042
50. . 12/17/2021 $1722.02 $498 $1,225 $189,716
90. . 4/17/2025 $1722.02 $364 $1359 $138,023
120. . 10/17/2027 $1722.02 $253 $1470 $95,560
150. . 4/17/2030 $1722.02 $134 $1589 $49,646
180. . 10/17/2032 $1722.02 $4 $1718 $0.00. .
total ------- $310,071 78,747.97 247,200 ---------

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

amount of the mortgage
The total principal paid is the same as the ______________________.
the monthly payments
The total amount paid is the number of payments times _________________________.
the principle
The total interest paid is the total amount paid minus ___________________________.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
2
Payment number _____ is the first one in which the principal paid is greater than the
interest paid.

168,452.0
The total amount of interest is $_____________ (more or less) than the mortgage.
3 less
The total amount of interest is _____________%
68% LESS (more or less) than the mortgage.

The total amount of interest is _____________%

32% of the mortgage.
30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. .11/17/17 1,144.82 772.50 372.32 246,827.68
2. 12/17/17
. 1,144.82 771.34 373.48 246,454.20
60. .10/17/22 1,144.82 697.25 447.57 222,671.31
120. 10/17/27
. 1,144.82 601.72 539.72 193,092.68
240. .10/17/37 1,144.82 359.99 784.83 114,412.93
300. .10/17/42 1,144.82 198.41 946.41 62,546.28
360. 10/17/47
. 1,144.82 3.57 1,142.72 $0.00. .
total - - - - - - - 412,137 164,937 247,200 ---------

137
Payment number _____ is the first one in which the principal paid is greater than the interest paid.
82,263 less(more or less) than the mortgage.
The total amount of interest is $_____________

The total amount of interest is _____________%

33.28 less (more or less) than the mortgage.

The total amount of interest is _____________%

66.72 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
135,331.02
$__________.

The total amount of interest paid with the $100 monthly extra payment would be
$___________ (more or less) than the interest paid for the scheduled payments only.
29,605.98 less
The total amount of interest paid with the $100 monthly extra payment would be
___________%
19% less (more or less) than the interest paid for the scheduled payments only.

25
The $100 monthly extra payment would pay off the mortgage in ____ years and ____ 6
55
months; thats ______ 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.

Writing assignment:

Through this project I have learned that the interest rates on mortgage loans are generally higher
for a longer loan period. In the example that I worked on, the 30-year mortgage had a .625%
higher interest rate than the 15-year mortgage had. Though the monthly payments end up being
more, in my case $577.20 more a month, you end up paying less in interest because the interest
rate is lower and the mortgage loan term is shorter.