Math 1050 Term Project Group 4 Presentation

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Term Project Part 3

Katelyn Merkley

Scott Johnson

Spencer Wolford

Math 1050 Term Project Group 4 Presentation

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The BasicsBackground information

Location Occupation Yearly income

Katelyn Seattle, WA Art Educator 25,057

Scott Seattle, WA Police Officer $64,310.40

Spencer Salt Lake City, UT

Economist $100,000

Math 1050 Term Project Group 4 Presentation

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Mortgages15 and 30 year Mortgages

Income House Listing Price

10% Down Payment

Loan amount

15 year Interest rate

15 year Monthly payment

30 year Interest rate

30 year monthly payment

Katelyn $40,430 $89,999 $8,999 $81,000 2.84% $553.16 3.44% $361.02

Scott $64,310.40

$85,765 $8,576 $85,765 2.875% $563.00 3.5% $386.00

Spencer $100,000 $389,000 $38,900 $350,100 3.00% $2,424.63

4.00% $1,676.22

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Amortization Schedules15 year Amortization Schedule

Monthly Principle and Interest

Total of 180 payments

Total interest Paid

Payment is applied to principle rather than interest

Pay-off Date

Katelyn $553.16 $99,568.65 $18,568.65 Na November 2027

Scott $587.13 $105.684.29 19,919.29 Na October 2027

Spencer $2424.63 $436.433.79 $86,333.79 November 2027

Math 1050 Term Project Group 4 Presentation

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Amortization Schedule30 year Amortization Schedule

Monthly Principle and Interest

Total of 360 payments

Total interest Paid

Payment is applied to principle rather than interest

Pay-off Date

Katelyn $361.02 $129,966.74 $48,966.74 October 2022

November 2042

Scott $385.12 $138,644.34 $52.879.34 February 2023

October 2042

Spencer $1,676.22 $603,433.84 $253,33.84 November 2041

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15 Year Mortgage Analyzed:Pros Interest Rates are lower than a 30-year loan. Builds equity quicker due to shorter amortization

schedule Interest paid is dramatically lower over the

duration of the loan You pay more principal a month rather than more

interest

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15 Year Mortgage Analyzed:Cons Monthly payments are significantly higher than

30-year loans. Restricts loan applicants to a smaller house than

they might be able to afford with a 30-year loan.

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30 Year Mortgage Analyzed:Pros Monthly payments are lower than 15-year loans

because the interest is amortized over a long period

Lower monthly payments free up money for investments and savings

Higher interest, increases the amount home owners can deduct at tax time

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30 year Mortgage Analyzed:Cons Borrowers build equity at a very slow rate because

payments during the first several years goes largely toward the interest rather than the principal of the loan.

Over all interest paid is much higher due to the long amortization schedule.

The interest rates are higher than on 15-year loans.

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Total Interest Comparison

Katelyn Scott Spencer$0.00

$50,000.00

$100,000.00

$150,000.00

$200,000.00

$250,000.00

$300,000.00

$350,000.00

$400,000.00

$450,000.00

$89,999.00 $85,765.00

$389,000.00

$48,966.74 $52,879.34

$253,333.84

$18,568.65 $19,919.29

$86,333.79

House Listing30Y Total Interest15Y Total Interest

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Advantage of an extra $100 Spencer found that if he were to add an extra $100

a month to his (15 year) monthly payment, in the long run, the total interest paid would be 16,258.72, rather than $19,919.29 Total Savings: $3,660.57

In addition, His house would be paid off 2.5 years earlier than if he paid only the scheduled amount for his 15 year loan.

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Conclusions The sooner you pay off debts the more money you

save in the long run The amount the down payment put down and the

monthly payment control how long you have debt There is a linear relationship between the loan

amount and the total interest paid. Even a hundredth of a percent makes a big dollar

difference when it comes to interest rates.

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Conclusions Cont. The interest difference between a 15 year loan and

a 30 year loan is more than twice the amount It’s rather 2.5-3 times the amount of interest.

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Participation Group Leader: Katelyn Merkley Facts and Figures: Katelyn Merkley, Scott

Johnson, Spencer Wolford PowerPoint: Katelyn Merkley Pros and Cons: Scott Johnson Conclusions: Scott Johnson, Katelyn Merkley Group Discussion Questions: Katelyn Merkley,

Spencer Wolford, Scott Johnson