Mortgage Project – Spring B 2017 This project may be completed by teams of two students or as an individual project. Reports submitted by teams of two students earn a bonus of 10 points added to their score. Your best friend wants your help reviewing m

Mortgage Project – Spring B 2017
This project may be completed by teams of two students or as an individual project. Reports
submitted by teams of two students earn a bonus of 10 points added to their score.
Your best friend wants your help reviewing mortgage loan options and has asked you to help
since you have recently studied the mathematics of consumer loans. Your friend is currently
living in another state and needs your help finding a home to purchase as well as selecting a
mortgage.
1.  Choose a home for sale in Volusia or Flagler County to use for your calculations.
Check out local realtors' websites for the property.
2.  Your friend is not certain about how large the down payment will be so make
calculations considering a down payment of both 10% and 20% of the sale price.
3.  Using the Internet, find local interest rates. Assume that your friend has a good credit
history.
4.  Find a mortgage payment calculator on the Internet to calculate monthly payments for
15-year and 30-year fixed rate mortgages using both 10% and 20% down payments.
5.  Calculate the total interest paid for each loan option.
6.  Examine the amortization schedule for each loan option to determine the first month
where the payment towards the principal is greater than the interest payment.
7.  Use a mortgage payment calculator on the Internet to determine how much interest
you would save by paying an extra $100 toward the principal each month.
8.  Complete the Mortgage Project Summary form and submit to the Assignments folder
by Friday, April 28. Based on your friend's financial situation, which of the four loan
options would you recommend for your friend? Write a letter to your friend
explaining the option you are recommending and why it is your friend's best option.
Submit the letter to the same Assignments folder by Friday, April 28.  Please
submit these documents in two (2) separate files: One file is the
summary form and the other file is the letter to your friend.
Scoring for the Mortgage Project
Points
Value
Project completed and submitted on time  20
Completed Mortgage Project Summary
(Errors and omissions will reduce this total)
40
Recommendation letter to friend 
(Advice is supported by data. Typos, spelling errors and grammar errors will reduce this total.)
40
TOTAL  100
Bonus for submitting team project 
(Both team members need to submit the project to their individual Assignments folder.)
10
Scores for projects submitted April 29 – May 5 may be reduced by 20 points. No project
will be accepted after May 5.
Mortgage Project – Comparing Fixed Rate Home Mortgage Options
 
 
Team Member  
Team Member  
Both team members need to upload the project report to receive credit.
Property Address  
Purchase Price  
Website for property information  
Website for interest rate information  
Website for mortgage calculator  
 
20% down payment  
Loan Amount  
30-year interest rate  
Monthly Payment  
Total Interest paid  
1st
 payment where Principal payment exceeds Interest payment  
Interest saved by paying $100 extra toward principal each month
(Use an online mortgage calculator to find this information.)
 
 
15-year interest rate  
Monthly Payment  
Total Interest paid  
1st
 payment where Principal payment exceeds Interest payment  
Interest saved by paying $100 extra toward principal each month
(Use an online mortgage calculator to find this information.)
 
 
10% down payment  
Loan Amount  
30-year interest rate  
Monthly Payment  
Total Interest paid  
1st
 payment where Principal payment exceeds Interest payment  
Interest saved by paying $100 extra toward principal each month
(Use an online mortgage calculator to find this information.)
 
 
15-year interest rate  
Monthly Payment  
Total Interest paid  
1st
 payment where Principal payment exceeds Interest payment  
Interest saved by paying $100 extra toward principal each month
(Use an online mortgage calculator to find this information.)
 
 
 
Recommendation letter to client/friend included on separate page.
Loan Payment Formula for Installment Loans
 
 
The regular payment amount, PMT, required to repay a loan of P
dollars paid n times per year over t years at an annual rate r is given
by
nt
n
r
n
r
P
PMT −
⎟
⎠
⎞
⎜
⎝
⎛
+−
⎟
⎠
⎞
⎜
⎝
⎛
=
11
 
 
On a scientific calculator you will need to enter extra parentheses to
ensure the calculations are done in the correct order.  The
denominator and the exponent need to be inside parentheses.
 
⎟
⎟
⎠
⎞
⎜
⎜
⎝
⎛
⎟
⎠
⎞
⎜
⎝
⎛
+−
⎟
⎠
⎞
⎜
⎝
⎛
= − )(
11
nt
n
r
n
r
P
PMT
 
 
 
The key sequence would be
= ×− ÷ + − ÷ ÷ × ))()^1(1( tnnrnrP 
 
Note:  (1)To raise to a power you may need to use  ^  or  yx
  or  xy
.  
          (2) You may need to enter n first and then press the (-) sign key.
 
Example:  Calculate the monthly payment for a loan of $200,000 if
the interest rate is 8% and the loan is for 20 years.
 
P = 200,000; r = 0.08; n = 12; t = 20
 
88.672,1$
880123798.1672))2012()^1208.1(1(1208.200000
≈
= × − ÷ + −÷÷×