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Professor Butcher
MATH 1030
4 March 2017
Finance Project
Buying a House:
The down payment is: $45,000 The amount of the mortgage is: $180,000
Rate for 15-year mortgage: 3.75% Rate for 30-year mortgage 4.5%
Professor Butcher
MATH 1030
4 March 2017
Rate for 15-year mortgage: 3.625% Rate for 30-year mortgage 4.375%
These payments cover only the interest and the principal on the loan. They do not cover the
insurance or taxes.
15-year mortgage:
Total $0
Professor Butcher
MATH 1030
4 March 2017
Use the proper number to fill in the blanks and cross out the improper word in the parentheses.
Payment number 1 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $126,384.09 (more or less) than the mortgage.
The total amount of interest is 70.23% (more or less) than the mortgage.
30-year mortgage:
Total $0
Payment number 171 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $36,463.15 (more or less) than the mortgage.
The total amount of interest is 20.26% (more or less) than the mortgage.
Professor Butcher
MATH 1030
4 March 2017
The total amount of interest paid with the $100 monthly extra payment would be $113,726.23.
The total amount of interest paid with the $100 monthly extra payment would be $29,810.62
(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 20.76% (more
or less) than the interest paid for the scheduled payments only.
The $100 monthly extra payment would pay off the mortgage in 24 years and 7 months; thats
65 months sooner than paying only the scheduled payments.
Summary:
If your monthly budget doesnt have room for a $1297.87 monthly payment for the 15
year compared to $898.71 with the 30 year the lower payment might allow you to get into a
The 15 year compared to the 30 year saves $89,920.94 in interest. That is a significant
number, but if you cant afford the 1297.87 monthly payment of the 15 year if might be worth
paying, over the course of 30 years to get a house. With a house, compared to renting, at least
If you can afford the 30 year with the extra payment, 989.71 a month, you could save
$29,810.62 in interest compared to the scheduled payments on the 30 year. Compared to the 15
year loans interest youd pay $60,110.32 more to have 308.16 a month more in your budget. If
you could spend the money to make the $1297.87 a month youd save this money. Once again,
Darshan Singh
Professor Butcher
MATH 1030
4 March 2017
it comes down to the flexibility you have in your monthly budget and some people dont have
It would take a payment of $1370 to pay off the 30 year loan in 15 years, $471.27 more
than the regular scheduled 30 year payments and $72.13 more a monthy than the 15 year loan.
Youd pay $65,462.19 in interest on this accelerated payoff 30 year loan, compared to only
$53,615.91 with the lower interest rate of the 15 year. It doesnt make any sense to have a higher
monthly payment, pay more interest and pay off the 30 year in an accelerated way.