Name: Bayley Seminitis

Instructor: Brenda Gardner

Class Time: 2:30 pm

Math 1030
Buying a House
1. 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 (See Bottom). Assume that you will pay the asking price
for your house.

a. The listed selling price is $228,000.

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

b. The down payment is $45,600.

c. The amount of the mortgage is $182,400.

2. 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: Mountain America Credit Union.

Rate for 15-year mortgage: $1326.45, at 3.75% Interest.

Rate for 30-year mortgage $819.06 at 3.5% Interest.

Name of second lending institution: America First.

Rate for 15-year mortgage: $1,418.77 at 4.75% Interest.

Rate for 30-year mortgage: $870.81 at 4% Interest.

3. 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. Show your steps (attach if
needed). Note: These monthly payments cover only the interest and the principal on the loan.
They do not cover the insurance or taxes. (See Work Below Listing Screenshot)

a. 15-year monthly payment: $1,326.45 with Mountain America Credit Union.

 b. 30-year monthly payment $819.06 with Mountain America Credit Union
.
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 a
Loan Amortization schedule in CANVAS to help you do this math. For the start date, simply pick the
first day of next month.

15-year mortgage

Payment Payment Principal Interest Remaining

Number Amount ($) Paid ($) Paid ($) Balance ($)
1. . $756.45 $570.00 $181.643.55
This amount should be the

2. . $758.82 $567.64 $180.884.73

same as #3a

50. . $881.41 $445.04 $141,531.25

90. . $998.58 $327.88 $103,921.52
120. . $1,096.56 $229.89 $72,468.29
150. . $1,204.16 $122.29 $37,928.74
180. . $1,322.32 $4.13 $0.00. .
total $182,400.00 $56,361.76 ---------

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

a. The total amount paid is the number of payments times the amount of each payment.
b. The total interest paid is the total amount paid minus the total principle paid.

5. a. Looking at the entire amortization schedule and not just the one written above, payment
number one is the first one in which the principal paid is greater than the interest paid. Based on
that payment number, fill out the following and cross out the improper word in the parentheses.
b. The interest paid is $126,038.24 (more or less) than the principal paid.
c. The interest paid is 69.1% (more or less) than the mortgage payment amount.
d. The interest paid is 30.9% of the ending balance.
Now look at the amortization schedule for the 30-year mortgage and answer the following questions.

Payment Payment Interest Principal Remaining

Number Amount ($) Paid ($) Paid ($) Balance ($)
1. . This amount should be the $532.00 $287.06 $182,112.94
2. . same as #3b $531.16 $287.89 $181,825.05
60. . $478.18 $340.87 $163,607.46
120. . $413.10 $405.96 $141,226.62
240. . $243.26 $579.79 $92,002.37
300. . $133.32 $685.74 $45,023.58
360. . $2.38 $816.68 $0.00. .
total $112,460.70 $182,400.00 ---------

6. a. Looking at the entire amortization schedule and not just the one written above, payment
number one? Or 240 depending on table is the first one in which the principal paid is greater than
the interest paid. Based on that payment number, fill out the following and cross out the improper
word in the parentheses.
b. The interest paid is $69,939.30 (more or less) than the principal paid.
c. The interest paid is 61.7% (more or less) than the mortgage payment amount.
d. The interest paid is 38.3% of the ending balance.
7. Suppose you paid an additional $100 a month towards the principal. Using the excel file or another
program, calculate the following:
a. The cumulative interest paid with the $100 monthly extra payment would be $89,505.97.

b. The cumulative interest paid with the $100 monthly extra payment would be $22,900.73
(more or less) than the interest paid for the scheduled payments only.

c. The total amount of interest paid with the $100 monthly extra payment would be 20.4% (more
or less) than the interest paid for the scheduled payments only.
 d. The $100 monthly extra payment would pay off the mortgage in 4 years and 4 months; thats
52 months sooner than paying only the scheduled payments.

8. Summarize what you have done and learned on this project. Because this is a math project, you
must compute and compare numbers, both absolute and relative values, that havent been
compared above. 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,
and (4) the 15-year mortgage to the 30-year mortgage with a large enough extra payments to save
15 years and have the loan paid off in 15 years. Also, keep in mind that the numbers dont explain
everything. Comment on other factors that must be considered with the numbers when making a
mortgage. Refer to the assignment rubric to see how you'll be graded.

After doing this project and recently being part of the home-buying process I have learned a lot
about what it takes to own and pay for a home. It requires more responsibility and it takes a
good amount of financial discipline and thought to make sure you are going to not only get the
best rates, but be paying the least amount of money over time.
I realized that loan rates are higher or lower depending on the amount of time you have them
for, 15 year rates being higher since it is less time, and 30 year rates being lower since it is more
time. There is definitely a difference in monthly payments and cost over time, taking a 15 year
loan out will save you from paying more interest in the long run by paying it back in less time, as
long as you keep the minimum payments or pay more than minimum, but you are going to need
that kind of financial income and planning to do so. Taking a 30 year loan out will help you
maintain a cheaper monthly payment which is what most people (including myself) would need
these days in this kind of economy if you do not have a really good paying job. This can save you
from having pennies at the end of the month, but can also cost you some pretty pennies down
the line when it comes to the whole cost you have paid off in full with the interest rate and it
accruing over a longer span of time.
In relation to the project, having a 15 year loan with a 3.75% interest rate would be the best
option for cost purposes over the period of time, saving me from paying about an additional
$56,099 with interest than with the 30 year loan and a 3.5% rate, which is an exponential
difference in price than what my original loan amount/house worth was. Taking the easier
payment with a 30 year loan, which as stated before, most people would do (as we have with
our new home), would be a worse option in the long run costing us in total $294,860.70, but in
comparison to the second 30 year loan at 4% would save us $18,630.90. If I were to go with the
30 year loan in this case I would attempt to pay an extra $100 or more to save me from paying
more in the long run, this would cut the time of my loan repayment by 4 years and 4 months,
which is definitely helpful.
In conclusion, having the 15 year loan would be more beneficial, but the 30 year would be the
most helpful for financial reasons monthly/in general. Most people, as I have heard, tend to
move in the span of their 30 year loan (even 15 year ones) and have to transfer that over to
their next home loan and sometimes end up upside-down, which isn't great either. No matter
what, I feel like you are going to be in an exponential amount of debt for a long time when you
get yourself into the home-buying process, but it is sometimes better than throwing away
money to rent when you could be investing in something yourself, just as long as you can afford
it. This project represents a great example of these kinds of situations and what to plan for and
avoid.
House Listing Screenshot: