Math Project

Instructions: Show all work for each section. Any paragraphs should be typed and written in complete sentences. Use Times New Roman, 12-point font and double space. Cite any resource that you use. (Click on the following attachment for a guide to cite resources in APA.) Include any additional paperwork with your project document. Please note: up to 10% of the total points could be deducted for shortcomings in sentence structure and mechanics for written responses.

Part III: Finding Mortgage Payments

In this scenario you cannot pay cash for your home (Refer to your answers in Home Project, Part 2) and you will need to get a loan from a financial institution. Research and find a current interest rate for both a 30-year fixed mortgage and a 15-year fixed mortgage through your bank or other source such as http://www.bankrate.com/mortgage.aspx .

Note: For all of Home Project Part 3, the calculated loans will not require a PMI payment.

Please record the purchase price of your chosen home from Part II:___________________

1. Record the interest rate for each loan from the bank of your choosing:

Loan 1: 30-year fixed mortgage:_________

Loan 2: 15-year fixed mortgage:_________

Cite your source:_____________________________

2. Suppose you decide to make a down payment of 20% of the purchase price for the 30-year fixed mortgage and 10% of the purchase price for the 15-year fixed mortgage.

a. Calculate the down payment for your house for the 30-year fixed mortgage. Show all work.

b. How much will you need to finance from the bank for the 30-year fixed mortgage with the 20% down payment? Show all work.

c. Calculate the down payment for your house for the 15-year fixed mortgage. Show all work.

d. How much will you need to finance from the bank for the 15-year fixed mortgage with the 10% down payment? Show all work.

3. Use the TVM Solver on your TI-83/84 calculator to get the monthly payment for each mortgage.

a. Loan 1: (the 30-year fixed mortgage with 20% down payment)

N = _______________

I % = ______________

PV = ______________

PMT = _____________

FV = ______________

P/Y = _____________

C/Y = _____________

PMT (set at End)

Monthly payment for Loan 1: ___________

Closing costs can be an unexpected expense when buying a home. These costs can include but are not limited to underwriting fees, other lender fees, title fees, appraisal fees, etc. Assume the cost of these items for each loan equals $2700.

Determine the total you could expect to pay at closing for this loan option (i.e. closing costs, down payment, points (if applicable) and first month’s mortgage).

List the costs. ____________

b. Loan 2: (the 15-year fixed mortgage with 10% down payment)

N = ________________

I % = _______________

PV = _______________

PMT = _____________

FV = _______________

P/Y = _______________

C/Y = _______________

PMT (set at End)

Monthly payment for Loan 2: ___________

Using the same $2700 for closing costs mentioned in part a, determine the total you could expect to pay at closing for this loan option. List the costs. ____________

Loan 3 scenario: Suppose your bank were offering a special deal where you could put 0% down for a 30-year fixed loan but the interest rate was 1.5% higher (penalty for putting nothing down) than the interest rate for the 30-year fixed with 20% down. Calculate the mortgage payment for this scenario.

c. Loan 3: (the 30-year fixed mortgage with 0% down)

N = ________________

I % = _______________

PV = _______________

PMT = _____________

FV = _______________

P/Y = _______________

C/Y = _______________

PMT (set at End)

Monthly payment for Loan 3: ___________

Using the same $2700 for closing costs mentioned in part a, determine the total you could expect to pay at closing for this loan option. List the costs. ____________

Loan 4 scenario: Suppose your bank were offering a lower interest rate for a 15-year fixed loan if you pay 4 points (4% of the loan amount) as part of your closing costs (not rolled into your mortgage amount). You are still required to put 10% down for a 15-year fixed loan but your interest rate is now 1.0% lower. Calculate the mortgage payment for this scenario.

d. Loan 4: (the 15-year fixed mortgage with points)

N = ________________

I % = _______________

PV = _______________

PMT = _____________

FV = _______________

P/Y = _______________

C/Y = _______________

PMT (set at End)

Monthly payment for Loan 4: _____________

Using the same $2700 for closing costs mentioned in part a, determine the total you could expect to pay at closing for this loan option. List the costs. ____________

*****HOME PRICE $209,900 1989 SQ FT

3 Updated: 8/11/2016