Math 1030 Project 1Name: Jodi Skogg Baldassari

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 $345,000.00.

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

The down payment is $69,000.00. The amount of the mortgage is $276,000.00.

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: Consumer Direct Mortgage.

Rate for 15-year mortgage: 2.75%. Rate for 30-year mortgage: 3.375%.

Name of second lending institution: Key Bank.

Rate for 15-year mortgage: 3.413%. Rate for 30-year mortgage: 3.897%.

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: $1873.00. 30-year monthly payment: $1219.42

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.

1

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 Number

Payment Date

Payment Amount ($)

InterestPaid ($)

PrincipalPaid ($)

Remaining Balance ($)

1 12-1-2016 1873.00 632.50 1240.50 274,759.50

. 01-1-2017 1873.00 629.66 1243.34 273,516.17

50 01-1-2021 1873.00 485.26 1387.74 210,361.58

90 05-1-2024 1873.00 352.20 1520.80 152,164.90

120 11-1-2026 1873.00 244.09 1628.90 104,883.84

150 05-1-2029 1873.00 128.30 1744.99 54,241.84

180 11-1-2031 1873.00 4.28 1868.71 $0.00. .

TOTAL - - - - - - - $337,140.00 $61,139.23 $276,000 - - - - - - - - -

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

The total principal paid is the same as the loan amount.

The total amount paid is the number of payments times 180.

The total interest paid is the total amount paid minus the principal paid.

Use the proper number to fill in the blanks.

Payment number 1 is the first one in which the principal paid is greater than the interest paid.

The total amount of interest is $214,860.77 less than the mortgage.

The total amount of interest is 22% less than the mortgage.

The total amount of interest is 18% of the mortgage.

2

30-Year Mortgage

Payment Number

Payment Date

Payment Amount ($)

InterestPaid ($)

PrincipalPaid ($)

Remaining Balance ($)

1 12-1-2016 1219.42 775.10 444.32 275,555.68

2 01-1-2017 1219.42 773.85 445.57 275.110.11

60 11-1-2021 1219.42 695.15 524.27 247,007.21

120 11-1-2026 1219.42 599.08 620.34 212,701.53

240 11-1-2036 1219.42 350.89 868.53 124.078.76

300 11-1-2041 1219.42 191.74 1027.68 67,246.59

360 11-1-2046 1219.42 3.41 1216.01 $0.00. .

TOTAL - - - - - - - $438,991.20 $162,995.41 $276,000.00 - - - - - - - - -

Payment number 114 is the first one in which the principal paid is greater than the interest paid.

The total amount of interest is $275,995.79 less than the mortgage.

The total amount of interest is 63% less 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 $140,570.08.

The total amount of interest paid with the $100 monthly extra payment would be $22,421.76 less than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be 16% less than the interest paid for the scheduled payments only.

3

The $100 monthly extra payment would pay off the mortgage in 26 years and 3 months;

that’s 43 months sooner than paying only the scheduled payments.

4