Math 1030

Name __Devon Bowers_____________

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 _$250,000___.

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

The down payment is 50,000. The amount of the mortgage is 200,000.

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: ____Chase Bank_______.

Rate for 15-year mortgage: ___3.875%___. Rate for 30-year mortgage __4.375%___.

Name of second lending institution: _______Wells Fargo______.

Rate for 15-year mortgage: __4.250%__. Rate for 30-year mortgage ____4.625%___.

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: ___3.875%__ 30-year monthly payment __4.375%___.

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.

15 year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/7/2018 $ 1,833.60 $ 807.29 $1,026.31 $ 248,973.69

2. . 5/7/2018 1,833.60 803.98 1,029.62 247,944.07

50. . 5/7/2022 1,833.60 631.65 1,201.95 194,406.89

90. . 9/7/2025 1,833.60 466.21 1,367.38 143,008.63

120. . 3/7/2028 1,833.60 327.36 1,506.24 99,868.31

150. . 9/7/2030 1,833.60 174.40 1,659.20 52,347.06

180. . 3/7/2033 1,827.70 5.90 1,821.79 0.00

total ------- 330,041.88 80,047.78 250,000.00 ---------

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

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

The total interest paid is the total amount paid minus the principal, or 250,000.00.

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 $169,952.22 (less) than the mortgage.

The total amount of interest is 68% (more) than the mortgage.

The total amount of interest is 32% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 4/7/2018 $ 1,248.21 $ 911.46 $ 336.75 $ 249,663.25

2. . 5/7/2018 1,248.21 910.23 337.98 249,325.26

60. . 3/7/2023 1,248.21 830.80 417.41 227,460.12

120. . 3/7/2028 1,248.21 728.95 519.27 199,419.95

240. . 3/7/2038 1,248.21 444.59 803.62 121,142.33

300. . 3/7/2043 1,248.21 248.49 999.72 67,157.94

360. . 3/7/2048 1,243.68 4.53 1,239.14 0.00

total ------- 449,352.20 199,356.73 250,000.00 ---------

Payment number 171 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $50,643.27 (less) than the mortgage.

The total amount of interest is 20.3% (less) than the mortgage.

The total amount of interest is 79.7% 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 $ 167,579.94
.

The total amount of interest paid with the $100 monthly extra payment would be
$31,776.79 (less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 15.9%
(less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 4 years and 2 months;
that’s 50 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

Also, keep in mind that the numbers don’t explain everything. Comment on other factors that
must be considered with the numbers when making a mortgage.