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Math 1030
Buying a House
Name: Karen Albor
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 $204,900. Assume that you will make a down
payment of 20%.
The down payment is $40,980. The amount of the mortgage is $163,920.
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: MACU.

Rate for 15-year mortgage: 4.375. Rate for 30-year mortgage 4.625.
Name of second lending institution: Greystone Mortgage.

Rate for 15-year mortgage: 4.5. Rate for 30-year mortgage 4.775.
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: $1243.55.
30-year monthly payment:$841.867.
These payments cover only the interest and the principal on the loan.
They do not cover the insurance or taxes.
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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 Paid Principal Remaining

Number Date Amount ($) ($) Paid ($) Balance ($)
1. . 07/01/18 841.867 631.77 210.10 163,709.90

2. . 08/01/18 841.867 630.97 210.90 163,499.00

60. . 841.867 578.25 263.62 149,768.16

120. . 841.867 509.81 332.06 131,942.29

240. . 841.867 315.01 526.86 81,205.49

300. . 841.867 178.23 663.64 45,579.72

360. . 841.867 5.94 835.93 $0.00 .

total ------- ---------- ---------

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


The total amount paid is the number of payments times the amount paid
times the year amount.. The total interest paid is the total amount paid
minus the amount of the loan.
Use the proper number to fill in the blanks and cross out the improper
word in the parentheses.
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Payment number 182 is the first one in which the principal paid is
greater than the interest paid.
The total amount of interest is $139,152.12 more than the mortgage. The
total amount of interest is 84.89% more than the mortgage. The total
amount of interest is 184.90% of the mortgage.
15-year mortgage

Payment Payment Payment Interest Paid Principal Remaining

Number Date Amount ($) ($) Paid ($) Balance ($)
1. . 07/01/18 1243.55 597.62 645.93 163274.07

2. . 08/01/18 1243.55 595.27 648.28 162625.79

50. . 1243.55 471.53 772.02 128563.00

90. . 1243.55 350.56 892.99 95261.27

120. . 1243.55 247.55 996.00 66903.00

150. . 1243.55 132.65 1110.00 35273.34

180. . 1243.55 4.50 1239.05 $0.00

total ------- 223839 ---------

Payment number 1 is the first one in which the principal paid is greater
than the interest paid. The total amount of interest is $59,919 more than
the mortgage.
The total amount of interest is 36.55% more than the mortgage.
The total amount of interest is 136.55% 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 $107,243.52.
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The total amount of interest paid with the $100 monthly extra payment
would be $31,908.60 less than the interest paid for the scheduled
payments only.
The total amount of interest paid with the $100 monthly extra payment
would be 77.06% less than the interest paid for the scheduled payments
only.
The $100 monthly extra payment would pay off the mortgage in 24
years; that’s 72 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.

Based on the information calcualted between the two mortgages one being a loan for

$163,920.00 with a 30 year 380 month loan at a 4.625% interest rate. The other option for

a loan term of 15 years 180 month loan at a 4.375% interest rate. I have discovered that

choosing the 15 year loan option is a better choice financially. The interest paid would be

$59,919.00 comapred to the 30 year loan where the interest amount paid would be

$139,152.12. However when comparing the 30 year loan making regular payments to the
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same loan making $100 extra payment each month on top of the mortgage due it will

save $31,908.60 choosing this option. It would be best to choose a 15 year loan term if

possible. If you do choose a 30 year loan term then the difference in savings from interest

is in the thousands dependending on how much extra you apply towards the principle

each month. By paying more in addition to the regular payment you will also pay off the

loan faster. With just $100 extra a month is takes your loan from a 30 year to a 24 year

loan.