1. Term Project Part 3 Katelyn Merkley Scott Johnson Spencer Wolford 1 Math 1050 Term Project Group 4 Presentation

2. The Basics Background information LocationOccupationYearly income KatelynSeattle, WAArt Educator25,057 ScottSeattle, WAPolice Officer$64,310.40 SpencerSalt Lake City, UT Economist$100,000 2 Math 1050 Term Project Group 4 Presentation

3. Mortgages 15 and 30 year Mortgages IncomeHouse 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$81,0002.84%$553.163.44%$361.02 Scott$64,310.40$85,765$8,576$85,7652.875%$563.003.5%$386.00 Spencer$100,000$389,000$38,900$350,1003.00%$2,424.634.00%$1,676.22 3 Math 1050 Term Project Group 4 Presentation

4. Amortization Schedules 15 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$18,568.65NaNovember 2027 Scott$587.13$105.684.2919,919.29NaOctober 2027 Spencer$2424.63$436.433.79$86,333.79November 2027 4 Math 1050 Term Project Group 4 Presentation

5. Amortization Schedule 30 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$48,966.74October 2022 November 2042 Scott$385.12$138,644.34$52.879.34February 2023 October 2042 Spencer$1,676.22$603,433.84$253,33.84November 2041 5 Math 1050 Term Project Group 4 Presentation

6. 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 6 Math 1050 Term Project Group 4 Presentation

7. 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. 7 Math 1050 Term Project Group 4 Presentation

8. 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 8 Math 1050 Term Project Group 4 Presentation

9. 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. 9 Math 1050 Term Project Group 4 Presentation

10. Total Interest Comparison 10 Math 1050 Term Project Group 4 Presentation

11. 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. 11 Math 1050 Term Project Group 4 Presentation

12. 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. 12 Math 1050 Term Project Group 4 Presentation

13. 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. 13 Math 1050 Term Project Group 4 Presentation

14. 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 Math 1050 Term Project Group 4 Presentation 14