Math 1030

Name _Lexi Buxton_____________________________

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 _$239,900___________.

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

The down payment is _$47,980__ _________. The amount of the mortgage is

_$191,920___________.

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: _Bank of America__________________________.

Rate for 15-year mortgage: _4.125%___________. Rate for 30-year mortgage

_4.750%___________.

Name of second lending institution: _Wells Fargo__________________________.

Rate for 15-year mortgage: 4.375%____________. Rate for 30-year mortgage

_4.875%___________.

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: Bank of America: $1431.66, Wells Fargo: $1455.94___________.

30-year monthly payment: Bank of America: $1001.15, Wells Fargo:
$1015.66____________.

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 an MS excel file included on our CANVAS page if you are using a PC or you can also
use any online programs that are available such as the one on Brett Whissle’s website
http://bretwhissel.net/cgi-bin/amortize​ if you are using a MAC.

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 Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. ​. 12/1/18 191920.00 759.68 241.46 191678.54
2. ​. 1/1/19 191678.54 758.73 242.42 191436.12
60. ​. 11/1/23 175908.26 696.30 304.84 175603.42
120. ​. 11/1/28 155308.85 614.76 386.38 154922.46
240. ​. 11/1/38 96106.38 380.42 620.72 95485.66
300. ​. 11/1/43 54161.51 214.39 786.76 53374.75
360. ​. 11/1/48 997.20 3.95 993.25 $0.00 ​.
total ------- ---------- 168492.40 191920.00 ---------

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

The total amount paid is the number of payments times _total payments
________________________.

The total interest paid is the total amount paid minus __mortgage
amount_________________________.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number __186___ is the first one in which the principal paid is greater than the interest
paid.
The total amount of interest is $23427.60____________ less than the mortgage.

The total amount of interest is 12.2_____________% less than the mortgage.

The total amount of interest is 87.8_____________% of the mortgage.

15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 12/1/18 191920.00 659.73 771.94 191148.06
2. . 1/1/19 191148.06 657.07 774.59 190373.47
50. . 1/1/23 150799.68 518.37 913.29 29549.44
90. . 5/1/26 111709.34 384.00 1047.66 110661.68
120. . 11/1/28 78661.51 270.40 1161.26 77500.25
150. . 5/1/31 42030 144.48 1287.18 40742.99
180. . 11/1/33 1426.76 4.90 1421.85 $0.00
total ------- ---------- 65778.98 191920 ---------

Payment number 1_____ is the first one in which the principal paid is greater than the interest
paid.
The total amount of interest is $126141.02_____________ less than the mortgage.

The total amount of interest is 65.7_____________% less than the mortgage.

The total amount of interest is 34.3_____________% of the mortgage.

Notice how the 15-year mortgage reduces the amount of interest paid over the life of the loan.
Now consider again the 30-year mortgage 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
$134442.00_________.

The total amount of interest paid with the $100 monthly extra payment would be
$34050.40___________ less than the interest paid for the scheduled payments only.
 The total amount of interest paid with the $100 monthly extra payment would be
20.2___________% less than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 24____ years and 9____
months; that’s 63 ______ 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 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

You have just bought a house and are trying to see which house mortgage is the cheapest
and best plan for you. You have either the 15-year mortgage payment or the 30-year mortgage
payment. You have ended up on two different lending institutions, Bank of America, and Wells
Fargo. You made the calculations and compared the two interest rates with the years with each
other and decided that Bank of America will help you save more money. With the 15-year
mortgage and the 30-year mortgage, what I did was put it into the excel sheet and it made all of
the calculations for me. I then compared the two. The 15-year mortgage ended up with a higher
number on payment so the 30-year plan would be a better way to go because it ended up with a
smaller payment amount at the end. But if you were to consider how the 15-year vs the 30-year
is cut in half then it could be smarter to do the 15-year because it may end up with you paying
more on the last payment, it will end up being done 15-years earlier. The second comparison is
the 15-year mortgage interest and the 30-year mortgage interest. I had my same calculations in
the spreadsheet. And in one of the columns there’s an interest rate. How I found the interest was
I figured out how much the amount of interest payment would be. With that number I divided the
amount of mortgage by it and that’s how I found the percentage of interest. The 15-year one was
about 50% bigger than the 30-year interest. Lastly we are going to compare and look at both the
15-year and the 30-year with the extra $100 payment. I added the $100 to the excel sheet and
switched the numbers. By adding the $100 extra payment, you would be able to pay it off in
about 24 years saving money and making the payment sooner. It would also just be a lot cheaper
than the other payment rates.