Math 1030

Project 1

(Work in groups of two to four.)

Name Lawrence Deherrera

David Luna
Jesse Valdez

Buying a House

Select a house from a real estate booklet, newspaper, or website. Find something reasonable
between $100,000 and $350,000. Cut out the picture and/or description of 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 $133,000.
Assume that you will make a down payment of 20%.
The down payment is $26,600.

The amount of the mortgage is $106,400.

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: Wells Fargo.
Rate for 15-year mortgage: 2.875%.

Rate for 30-year mortgage 3.625%.

Name of second lending institution: Chase.

Rate for 15-year mortgage: 3.0%.

Rate for 30-year mortgage 3.75%.

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: $726.

30-year monthly payment $483.

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. A Microsoft Excel worksheet that does this
available online at http://office.microsoft.com/en-us/templates/loan-amortization-scheduleTC001019777.aspx?CategoryID=CT062100751033. Its not necessary to show all of the
payments. Fill in the sample of payments in the following schedules, and answer the questions
after each table.
15-year mortgage

Paymen Paymen
t
t Date
Numbe
r

Payment
Amount ($)

Interest
Paid ($)

Principal
Paid ($)

Remaining
Balance ($)

1. . 8/1

$728

$254.92

473.48

$105,926

2. . 9/1

$728

$253.78

$474.62

$105,451.9
0

50. . 01/1

$728

$196.01

$532.39

$81,281.45

90. . 6/1

$728

$142.53

$585.87

$58,906.72

120. . 12/1

$728

$98.93

$629.47

$40,662.71

150. . 6/1

$728

$52.08

$676.32

$21,060.83

180. . 12/1

$728

$1.74

$726.66

total

------

$0.00 .
---------

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

The total principal paid is the same as the original loan amount.
The total amount paid is the number of payments times the payment amount.
The total interest paid is the total amount paid minus original loan amount
Use the proper number to fill in the blanks and cross out the
improper word in the parenthesis.
Payment number 1st is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $ 24,711.86(more ) than the mortgage.
The total amount of interest is 23% (more ) than the mortgage.
The total amount of interest is 23% of the mortgage.

30-year mortgage
Paymen Paymen
t
t Date
Numbe
r

Payment
Amount ($)

Interest
Paid ($)

Principal
Paid ($)

Remaining
Balance ($)

1. . 1/1

$483.00

$321.42

$163.82

$106,400

2. . 1/1

$483.00

$320.92

$164.82

$106,071.8
6

60. . 1/1

$483.00

$289.51

$195.73

$95,641.31

120. . 1/1

$483.00

$250.68

$234.56

$82,748.24

240. . 1/1

$483.00

$148.38

$336.86

$48,781.24

300. . 1/1

$483.00

$81.55

$403.69

$26,591.65

360. . 1/1

$483.00

$1.46

$483.78

total

------

$483.78 .
---------

Payment number 132nd is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $68393.70 (more ) than the mortgage.
The total amount of interest is 64% (more ) than the mortgage.
The total amount of interest is 37% of the mortgage.
Suppose you paid an additional $100 a month towards the principal:
The total amount of interest paid with the $100 monthly extra payment would be $48261.20.
The total amount of interest paid with the $100 monthly extra payment would be $20,132.50
(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 29% (less) than
the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in 23 years and 1 months; thats
95 months sooner than paying only the scheduled payments.
Observations and Reflections:
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 30year 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, you know that the numbers dont
explain everything. Comment on other factors that must be considered with the numbers when
making a mortgage.