Term Project Part 3 Completed By: The Unstoppable Force Chase Baker ~ Kelsey Vaseleou ~ Christine Littlefield ~ Jesica Bowman ~ Mason Francom

For every 0.1% interest The total cost increases $4,059 For every 1% interest The total cost increases by $42,000 interest ratetotal cost 3.5%$123,312.18$323, %$127,344.65$327, %$131,403.75$331, %$164,813.62$364, total interest For a $200,000 loan over 30 years By: Mason Francom

The length of the loan can effect the amount paid in two ways Interest is a monthly percentage that is added to the principal. How much interest is While researching the amount for a house in the end banks were willing to give a lower interest rate for the 15 year vs. the 30 year loan. Using the formula below to prove time effects the total payment P=94900 R=.03 N=12 15 year loan Total paid $ year loan Total Paid $ By Jesica Bowman

When you take out a loan to purchase a home, there is a process called amortization that will show you what portion of each monthly payment on your mortgage goes towards interest, and what portion goes to paying down the principal balance. Every month, the bank will recalculate your loan, taking the previous principal balance and subtract the amount you paid that went toward the principal; when you make extra monthly payments, the principal is paid down further. In short, extra monthly payments reduce the life of your loan and the amount of interest you have to pay. By: Chase Baker

$200,000 Mortgage ~ 30 year loan 5% interest rate Loan Date: June 2013 Pay Off Date: June 2043 Total Interest Paid: $186, Total Money Spent: $386, $200,000 Mortgage ~ 30 year loan 5% interest rate ~ $100 extra monthly Loan Date: June 2013 Pay Off Date: April 2038 Total Interest Paid: $149, Total Money Spent: $349, As you can see from this example, just by adding an extra $100 to your payment every month, you will save $37, and have your home paid off 5 years sooner. Not everyone can afford to make extra monthly payments, but there is a significant advantage awaiting anyone who can. By: Chase Baker

30 Year Mortgage15 Year Mortgage ProsConsProsCons Smaller PaymentHigher Interest rateLower Interest rateHigher Payment Flexibility of paying higher payments if wanted More paid on total cost of home Less paid on total cost of home Locked in at paying higher payment 30 Year 3.875%30 Year W/ $100 Extra Payment 3.875% 15 Year 3% $76,764.60$54,481.04$26, Examples of the total interest paid on a mortgage of $ are listed below for comparison. By: Kelsey Vaseleou

Renting Pros Flexibility Lower upfront costs Expenses: security deposit and monthly rent, renters insurance Possible amenities Landlord takes care of maintenance Landlord pays some utilities Money invested elsewhere Cons Not building equity Fluctuation in rent No guaranteed stability Subject to landlord’s rules Buying Pros Build equity Tax deductions Make all decorating decisions Make maintenance decisions Live the American dream Stability Cons Inflexibility High upfront costs Expenses: down payment, taxes, insurance, maintenance fees, monthly mortgage payment No amenities Financial or Foreclosure risk By: Christine Littlefield

Based on the above information there are many pros and cons to buying or renting a home. The decision should be based on financial and job stability. Also if it is the right time to invest the time and money into a home. Making the decision to buy a home requires a lot of homework. It requires finding a desired location, good credit, an affordable home, upfront costs, and long term costs. Renting provides a good option for exploration and flexibility, as well as becoming more financially secure. By: Christine Littlefield

This project is useful in real life because of the fact that it helps prepare and educate future home buyers, letting them know what options they have and what benefits come from planning and budgeting. It has been a useful application of the material we are using in class. It gives us something a little more tangible to understand as we plan for our future. It is vital that we understand the material we are learning in this class, because we can find other ways to apply this to other areas in our lives. By: Christine Littlefield