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Math 1050 College Algebra Term Project

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Math1050

College Algebra

Term Project

Mortgage Formula

- We discovered the rate of a 15 year loan is significantly less than a 30 year loan
- An average of 2.71% for 15 years and 3.6% for 30 year loans
- Between the 6 of us included in this project, we would collectively save a whopping $1,191,621 in getting a 15 year vs. 30 year loan
- That is an average savings of $198,604

- The banks take on less risk with 15 year loans. They get their money back sooner so they’re more generous with interest rates in order to entice buyers
- Adding an additional $100 a month to our payments averaged out to pay off our homes 6 months earlier, saving an average of $4066 in interest
- We would save an average of $22,711 in the monthly payments, that we would of spent over those six months

- The ideal way to go with a mortgage loan when comparing a 30 year fixed to a 15 year fixed loan, is with the 15 year option because of having a smaller APR percentage
- On a home with a purchase price of $359,900, with a 10% down payment, the note rate on a 15 year was 2.5% and on a 30 year was 3.25%
- The amortization schedule reflects interest saved of $118,720.19 when choosing a 15 year over a 30 year

- Another advantage of going with a 15 year option is much more of your monthly payment is going towards principal as compared to interest, starting with your very first payment
- On the 30 year loan it would take you 8 years and 9 months before payments applied towards principal are greater than interest
- Although your monthly payment is higher on the 15 year option, your home will be paid off in half the time without your payment being doubled

- If you couldn’t find your ideal home within your price range, you could always buy a cheaper home using the difference to renovate it
- Purchase a cheaper home in your ideal neighborhood and put the changes you want to make it your own. When your home is completed it will be worth more than what you put into it
- Save for a larger down payment to get a larger home, or have a cheaper monthly payment

- Having a home inspection before putting in a bid will inform you of any problems in the home and possibly lower the asking price
- Buying a short sale/foreclosed home will give you a more of a home for a lesser price
- Renting out a room could help you pay your home off quicker, allowing you to purchase that dream home a little sooner