Math 1030

Project 1

(Work in groups of two to four.)

Paige Pearson___________________

Buying a House

Theresia Coates_________________
______________________________
______________________________

Select a house from a real estate booklet, newspaper, or website. Find something reasonable
between $100,000 and $350,000. Cut out the picture and/or description of 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 __$274,000__.
Assume that you will make a down payment of 20%.
The down payment is __$54,800____.

The amount of the mortgage is ____$219,000_.

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: ____Navy Federal Credit Union___________________.
Rate for 15-year mortgage: ____2.65%___.

Rate for 30-year mortgage __3.00%______.

Name of second lending institution: ____America First Credit Union__________________.

Rate for 15-year mortgage: ____2.75%______. Rate for 30-year mortgage ___3.375%_______.
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: ____$1477.13____. 30-year monthly payment __$924.16_____.
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. A Microsoft Excel worksheet that does this
available online at http://office.microsoft.com/en-us/templates/loan-amortization-scheduleTC001019777.aspx?CategoryID=CT062100751033. Its not necessary to show all of the
payments. Fill in the sample of payments in the following schedules, and answer the questions
after each table.

15-year mortgage
Paymen Paymen
t
t Date
Numbe
r

Payment
Amount ($)

Interest
Paid ($)

Principal
Paid ($)

Remaining
Balance ($)

1. . 7/2016

1477.13

484.07

993.06

218,206.94

2. . 8/2016

1477.13

481.87

995.26

217,211.68

50. . 8/2020

1477.13

370.71

1106.42

166,762.94

90. . 12/202
3

1477.13

268.65

1208.48

120,443.90

120. . 6/2026

1477.13

185.97

1291.16

82,921.59

150. . 12/202
8

1477.13

97.63

1379.50

42,832.17

180. . 6/2031

1477.13

3.25

1473.88

0.00 .

Total

265,883.46

46,683.46

219,200.00

---------

------

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

The total principal paid is the same as the _______mortgage_______________.
The total amount paid is the number of payments times ____payment amount______________.
The total interest paid is the total amount paid minus ____mortgage_____________________.
Use the proper number to fill in the blanks and cross out the
improper word in the parenthesis.
Payment number __1__ is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $____172,516.54_________ (more or less) than the mortgage.
The total amount of interest is __78.70_________% (more or less) than the mortgage.
The total amount of interest is _______21.30______% of the mortgage.

30-year mortgage
Paymen Paymen
t
t Date
Numbe
r

Payment
Amount ($)

Interest
Paid ($)

Principal
Paid ($)

Remaining
Balance ($)

1. . 7/2016

924.16

548.00

376.16

218,823.84

2. . 8/2016

924.16

547.06

377.10

218,446.75

60. . 6/2021

924.16

488.30

435.86

194,882.75

120. . 6/2026

924.16

417.85

506.30

166,635.42

240. . 6/2036

924.16

240.98

683.18

95,707.22

300. . 6/2041

924.16

130.56

793.59

51,431.46

360. . 6/2046

924.16

2.30

921.85

0.00 .

Total

332,696.18

113,496.18

219,200.00

---------

------

Payment number __84___ is the first one in which the principal paid is greater than the interest
paid.
The total amount of interest is $___105,703.82________ (more or less) than the mortgage.
The total amount of interest is ____48.22_________% (more or less) than the mortgage.
The total amount of interest is _____51.78________% 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 $_94,943.94_.
The total amount of interest paid with the $100 monthly extra payment would be $_18,552.24__
(more or less) than the interest paid for the scheduled payments only.
The total amount of interest paid with the $100 monthly extra payment would be ___16.35____%
(more or less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in __25__ years and _7___
months; thats __54____ months sooner than paying only the scheduled payments.
Observations and Reflections:
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 30year 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, you know that the numbers dont
explain everything. Comment on other factors that must be considered with the numbers when
making a mortgage.
1) 15 year payment is more @ 552.97 Absolute and Relative is 59.8% more than 30 year.
2) 15 year is cheaper than the 30 year by $66,814.20 is the absolute and 20.08% is the
relative.
3) 15 vs. 30 with extra payment
30 year is $313,120.99, 15 year is $26,5883.40
Absolute $47,237.59 Relative 15.09%
15 year is still less than the 30 year.
4) 15 vs. 30 with $590 extra
PMTS
15 years-$1477.13, 30 years-$1514.16
Absolute $37.03 Relative 2.44%
INT
15-$46,683.46, 30-$53,257.05
Absolute $66,573.59 Relative 12.34%
15 year is still cheaper than the 30 year mortgage with the high increase of payments.

Theresia Coates
Doing this project has made me aware that a fifteen year mortgage is a better way to go when
financing your home, plus you need to look around for competitive rates even if it is just 10% it
can make the difference of 10 to 40 dollars a payment. Next the amount of a down payment or if
you pay just a little more a month it can help pay things of faster and with less interest saving
you money in the end.
There are other things that were not talked about in this project that can also change the amount
of payments and even your interest rates, one is insurance, another fees, and non-fixed rates are
just a few things that can change your payments. Some factors that we need to consider is if
people lose their jobs, get raises, gain more family members to support, receive a pay cut, or the
monthly spending. These factors may cause people to go for the 30 yr. instead of the 15yr
because of the lower payments and further down the line they may just refinance to the 15yr
when their finances allow making higher payments.