Math 1030

Name __Spencer Dalgleish__

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.redfin.com/UT/Salt-Lake-City/1247-Bryan-Ave-S-
84105/home/91746450

The listed selling price is ___$ 339,900_________.

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

The down payment is ___$ 67,980________. The amount of the mortgage is ___
$ 271,920_____.

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: _____Sebonics___________________.

Rate for 15-year mortgage: __ 3.115% _______. Rate for 30-year mortgage ___
3.865% ______.

Name of second lending institution: __ Great American Lending ________.

Rate for 15-year mortgage: __3.250% _______. Rate for 30-year mortgage ___ 4.0%
______.

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: __2,366.13__________. 30-year monthly payment

__1596.69_______.

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 Whissle’s website:
http://bretwhissel.net/cgi-bin/amortize.

It’s 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.

30-year mortgage

Payment Payment Interest Principal Remaining

Number Amount ($) Paid ($) Paid ($) Balance ($)
1. . 1596.69 1,094.76 501.93 339,398.07
2. . 1596.69 1,093.14 503.55 338,894.52
60. . 1596.69 989.90 606.79 306,736.16

120 . 1596.69 860.77 735.92 266,514.81

240. . 1596.69 514.22 1,082.47 158,572.04
300. . 1596.69 283.86 1,312.83 86,819.99
360. . 1395.06 4.48 1,390.58 $0.00
total ---------

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

The total amount paid is the number of payments times _____360____________.

The total interest paid is the total amount paid minus ____339,900____________.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number __ 146 ___ is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $___105,193.35______ (less) than the mortgage.

The total amount of interest is __ 30.95 _______% (less) than the mortgage.
The total amount of interest is ____ 68.47% _________% of the mortgage.
15-year mortgage

Payment Payment Interest Principal Remaining

Number Amount ($) Paid ($) Paid ($) Balance ($)
1. . 2366.13 882.32 1,483.81 338,416.19
2. . 2366.13 878.47 1,487.66 336,928.53
50. . 2366.13 681.34 1,684.79 260,789.25
90. . 2366.13 497.25 1,868.88 189,687.33
120. . 2366.13 346.10 2,020.03 131,307.36
150. . 2366.13 182.72 2,183.41 68,205.70
180. . 2366.62 6.13 2360.49 $0.00 .
total ---------

Payment number __1___ is the first one in which the principal paid is greater than the interest
paid.
The total amount of interest is $___ 253,896.11 ________ (less) than the mortgage.

The total amount of interest is _____ 74.70% _____% (less) than the mortgage.

The total amount of interest is _25.303%______% of the mortgage.

Consider the 30-year mortgage again and 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
$__206,691.78________.

The total amount of interest paid with the $100 monthly extra payment would be
$____28,014.87___ (less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
_____11.94%___% (more or less) than the interest paid for the scheduled payments
only.
 The $100 monthly extra payment would pay off the mortgage in _26___ years and _10___
months; that’s ___38___ months sooner than paying only the scheduled payments.

Summarize what you have done and learned on this project in a well written and typed paragraph
of at least 100 words (half page). 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 payment is $769.44 less than the 30 year payment.

2) The interest difference between the two loans is substantially more than I would expect

coming in at $148,702.76 less on the 15 year loan than on the 30 year with the standard

payment

3) The 30 year loan with the extra 100 dollar a month payment is helpful and saves a total of

28,014.87 as compared to the standard payment 30 year loan. It still costs the buyer

120,687.89 dollars more to go with the 30 year plus 100 dollars as opposed to the 15 year

loan.

Obviously, it is a financially wise decision to put as much money as fast as possible towards

your loans. Not only do they pay down the principal and lower the interest faster as a result.

But the shorter loans start off with a lower interest rate to begin with. It all comes down to a

matter of how much financial planning you have done in order to know how much you can

afford now, in the future, and when is an appropriate time to buy a house based on the market

that you are looking at and with prospects for future increases in income. Loans are tricky

and expensive business but knowing how to plan for them can save a lot of money for an

individual.