Math 1030

Name: kazimire Nivyukuri

Buying a House

The listed selling price is: $159,900

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

The down payment is: 31,980 The amount of the mortgage is: 127,920

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: American First Credit union

Rate for 15-year mortgage: 3.250% Rate for 30-year mortgage :4.250%

Name of second lending institution: Wells Fargo.

Rate for 15-year mortgage: 3.75%. Rate for 30-year mortgage :4.50%

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: $898.85 30-year monthly payment $629.29

These payments cover only the interest and the principal on the loan. They do not cover the
insurance or taxes.

Loan Amortization schedule

15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/20/17 898.85 346.45 552.40 127,367.60
2. . 5/20/17 898.85 344.95 553.90 126,813.70
50. . 5/20/21 898.85 268.17 630.69 98,385.08
90. . 9/20/24 898.85 196.11 702.75 71,706.38
120.. 3/20/27 898.85 136.71 762.14 49,715.36
150.. 9/20/29 898.85 72.29 826.56 25,865.61
 180. . 3/20/32 898.85 2.43 894.00 $0.00. .
total ------- 161,793.00 33,873.70 127,920.00 ---------

The total principal paid is the same as the: Loan Amount

The total amount paid is the number of payments times: The monthly payment
The total interest paid is the total amount paid minus: Principal
Payment number: 1 is the first one in which the principal paid is greater than the interest
paid.

The total amount of interest is $94046.3 (less) than the mortgage.

The total amount of interest is 73.5 % (less) than the mortgage.
The total amount of interest is 26.5% of the mortgage.
30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/20/17 629.29 453.05 176.24 127,743.76
2. . 5/20/17 629.29 452.43 176.86 127,566.90
60. . 3/20/22 629.29 412.17 217.12 116,161.21
120. . 3/20/27 629.29 360.87 268.42 101,623.79
240. . 3/20/37 629.29 219.02 410.27 61,431.54
300. . 3/20/42 629.29 122.08 507.21 33,961.39
360. . 3/20/47 629.29 2.22 624.85 $0.00. .
total ------- 226,544.4 98,624.22 127,920.00 ---------

Payment number: 166 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $ 29295.78 (less) than the mortgage.

The total amount of interest is 22.90 % (less) than the mortgage.

The total amount of interest is 77.1% 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 $72,338.88

The total amount of interest paid with the $100 monthly extra payment would be
$26,285.34(less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 26.65%
(less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 22 years and 11 months;
thats 85 months sooner than paying only the scheduled payments.
 Upon the completion of this house purchasing project, I got little insight on how the process

of purchasing a house works. And how one can reduce the stress that comes with it by doing

extra planning head. In comparing the 15-year mortgage payment to the 30-year mortgage

payment, I found that the interest percent plays major roll on how much of amount one is likely

to be paying monthly. And I also found that the term of the mortgage will determine what kind

of interest rate one is mostly likely to get. For example, on my house purchasing project, I could

get better interest rate from the two-mortgage lending institution that I visited with 15-year

mortgage compare to 30-year mortgage. It also accords to me that the longer one mortgage term

is, the higher the amount of interest the individual is going to pay. But even though this is the

case, one has the option to reduce the amount paid in interest to 30-year term, by making extra

monthly payment on top of the regular scheduled payment. This action can also reduce the life of

the loan in long run saving you a lot of money. This action works on both 15 and 30-year term.