Math 1050- Project 2-Buying a House and... Paying for it
Part I: Finding a House, Loan Amount, and Interest Rates
1. Select a house from a newspaper, real estate booklet, etc. Minimum of $100,000, Maximum of $500,000
2. Put asking price: $199,900
3. Calculate down payment and mortgage loan amount (20% and 80% respectively). DP: $39,980 MA: $159,920
4. Contact a lending institution, tell them you need the interest rate on a 30 year and 15 year fixed mortgage. Tell them you're putting 20% down, your loan amount, and that you have a 750 FICO score. 30 year rate: 4.125% 15 year rate: 3.375%
Part II: 30 year mortgage
5. Calculate the monthly payment for a 30 year mortgage using the following formula: (P(r/12))/(1-(1+(r/12)))^-12Y. MP: $775.05
6. List the following information from the amortization schedule:
a. Payment amount: $775.05
b. Total Interest Paid Over 30 years: $119,098.67
c. Total Amount Repaid: $279,018.67
7. Find the number of the first payment when more of the payment goes toward principal than interest: Pmt. No 160
8. As a wise home owner, you decide that your monthly principal and interest payment should not exceed 35% of your monthly take-home pay. What minimum monthly take-home pay should you have in order to meet this goal?: $2214.43
9. Assuming your net pay is 75% of your gross pay, what minimum gross monthly salary will you need to make to have the monthly net salary stated above?: $2952.57
10. Now computer the required Minimum Gross Annual Salary: $35,430.88
Part III. 15 Year Mortgage
11. Calculate the monthly payment for a 15 year mortgage using the formula stated earlier: $1133.45
12. List the following information from the amortization schedule:
a. Payment amount: $1133.45
b. Total Interest Paid Over 15 Years: $44,100.78
c. Total Amount Repaid: $204,020.78
13. Find the number of the first payment when more of the payment goes toward principal than interest.: Pmt. No: 1
14. Over the life of the loan, how much money do you save by having a 15 year mortgage versus a 30 year mortgage?: $74,887.89
Part IV. Extra Principal Payments
15. Suppose you paid an additional $100 towards the principal each month on the 30 year mortgage discussed in part II.
a. How long would it take to pay off the loan with this additional payment? ~24 years (289 months)
b. What is the total amount of interest paid over the life of the loan? $92,388.63
c. What is the total amount repaid over the life of the loan? $252,308.63
16. Compare the amount in 15 part c. to the total amount repaid without any extra payments in Problem 6 part c. How much would you save if you made the extra $100 per month in principal payments? $26,710.04
Part V. Reflection
The project has certainly shown me that I will be taking several accounts into consideration when purchasing a house. I don't necessarily have a career interest yet, but I will be looking into fields that pay well over the necessary minimum amounts needed on the house payments demonstrated by this project. I'm not sure exactly how I will save up for the down payment, but I can set aside money continuously and hopefully find a bank that gives a good interest rate until I can afford such a payment.
1. Select a house from a newspaper, real estate booklet, etc. Minimum of $100,000, Maximum of $500,000
2. Put asking price: $199,900
3. Calculate down payment and mortgage loan amount (20% and 80% respectively). DP: $39,980 MA: $159,920
4. Contact a lending institution, tell them you need the interest rate on a 30 year and 15 year fixed mortgage. Tell them you're putting 20% down, your loan amount, and that you have a 750 FICO score. 30 year rate: 4.125% 15 year rate: 3.375%
Part II: 30 year mortgage
5. Calculate the monthly payment for a 30 year mortgage using the following formula: (P(r/12))/(1-(1+(r/12)))^-12Y. MP: $775.05
6. List the following information from the amortization schedule:
a. Payment amount: $775.05
b. Total Interest Paid Over 30 years: $119,098.67
c. Total Amount Repaid: $279,018.67
7. Find the number of the first payment when more of the payment goes toward principal than interest: Pmt. No 160
8. As a wise home owner, you decide that your monthly principal and interest payment should not exceed 35% of your monthly take-home pay. What minimum monthly take-home pay should you have in order to meet this goal?: $2214.43
9. Assuming your net pay is 75% of your gross pay, what minimum gross monthly salary will you need to make to have the monthly net salary stated above?: $2952.57
10. Now computer the required Minimum Gross Annual Salary: $35,430.88
Part III. 15 Year Mortgage
11. Calculate the monthly payment for a 15 year mortgage using the formula stated earlier: $1133.45
12. List the following information from the amortization schedule:
a. Payment amount: $1133.45
b. Total Interest Paid Over 15 Years: $44,100.78
c. Total Amount Repaid: $204,020.78
13. Find the number of the first payment when more of the payment goes toward principal than interest.: Pmt. No: 1
14. Over the life of the loan, how much money do you save by having a 15 year mortgage versus a 30 year mortgage?: $74,887.89
Part IV. Extra Principal Payments
15. Suppose you paid an additional $100 towards the principal each month on the 30 year mortgage discussed in part II.
a. How long would it take to pay off the loan with this additional payment? ~24 years (289 months)
b. What is the total amount of interest paid over the life of the loan? $92,388.63
c. What is the total amount repaid over the life of the loan? $252,308.63
16. Compare the amount in 15 part c. to the total amount repaid without any extra payments in Problem 6 part c. How much would you save if you made the extra $100 per month in principal payments? $26,710.04
Part V. Reflection
The project has certainly shown me that I will be taking several accounts into consideration when purchasing a house. I don't necessarily have a career interest yet, but I will be looking into fields that pay well over the necessary minimum amounts needed on the house payments demonstrated by this project. I'm not sure exactly how I will save up for the down payment, but I can set aside money continuously and hopefully find a bank that gives a good interest rate until I can afford such a payment.