MATH 1050,COLLEGE ALGEBRA,TERM PROJECT PART 3

1. MATH 1050,COLLEGE ALGEBRA,TERM PROJECT PART 3 GROUP 3 homeloanarizona.net

2. Issac Smith is going to school to become a video game artist. He helped with compilation of information in a timely manner he also provided the final conclusion paragraph. • Alexis Rosier is going to school to become veterinarian. she helped with information compilation. • Alexandria Vigil is going to school to become a business entrepreneur in the beauty industry to create a cosmetic product line. She helped with the creation of the power point and the summarization of information. • Tyler Buchanan is going to school to become a computer programmer he helped with information compilation and insights. • Stephanie Van Wyngaarden is going to school to become a wildlife rehabilitator and she helped with information compilation and design. • Mckayla Newman is gong to school to become a Pharmacist. She helped with information compilation and adding new ideas to the power point. MEET THE GROUP

3. The 30 year loan has a lower monthly payment but the total amount you end up paying is more than a 15 year loan. • Conclusions: Right now for me as an individual, it's easy to focus on the short term and can be hard to comprehend how much money ends up being put into a large purchase such as a house. It blew me away how much money ends up being paid against interest in a 30-loan compared to the 15-year loan • Insights: I would go for the 15-year loan too to avoid that huge amount of interest that ends up being paid. However I can see the flexibility that comes with the 30-year loan that would allow you to invest in other areas such as home improvement and auto maintenance.. This project helped me to think in longer terms, a year, 5 years, 10 years from now and how I can use credit to my advantage for things (like a home) that I need soon, but don't yet have the cash for. I'll definitely use what I learn from this project when I intend to use credit to make the best informed decisions I can. Issac Smith

4. The 15 year interest rate is lower, but the payments are higher so you an pay off the loan. With the 30 year loan you have longer to pay. • Conclusions: For right now, while I’m going to school and will have to move around a lot, it would be in my best interest to just rent. Its cheaper and allows moving leniency. When I do decided to buy a home, I’ll go for a 15 year loan. This way I will have the loan paid off quicker in case something does happen and I have to move. Even though the payments are higher in the long run it will be easier on my wallet • Insights: This project helped me look at my future life, when I wont have my mom and dad to pay for things. It gave me a better understanding of what real life is like. It really showed me how much money goes into a home. www.hbalexington.com Alexis Rosier

5. Summary of results: The mortgage payment for a 30yr is $776.86. The pros of the 30 year mortgage are that you have a cheaper monthly payment. The cons are that your payment extends over a longer period of time, so it takes 30 years for you to own your home straight out. You pay more interest over the life of the loan and you earn less equity. The mortgage payment for a 15yr is $1172.91.The pros of a 15 year mortgage are that you own your home sooner, and you have a smaller interest rate so more of your monthly payment is going towards your principal. The cons are that you have to pay more money per month. • Conclusions: When you rent you do not own your home. You are subject to the terms of the lease. Therefore you have less freedoms of your home environment. Also your monthly payment is close to the same, if not more than the price to own the property. However you are not subject to the same liability and financial responsibility as a homeowner such as taxes, homeowners insurance, and cost of repairs to the home. That being said the ownership of home and property is an asset to your financial portfolio and every payment you make to a home you bought, instead of rented, and benefits you more financially in the long run. I would say renting is a good option if you don’t plan on staying in one place too long, or if you do not have the credit rating or debt to income ratio needed to purchase a home. Otherwise owning your own home is more financially beneficial, stable, and provides more freedom in your home environment. • Insights: The new ideas I have from this project just by parts one and two are that shopping for and purchasing a home, creating a budget, figuring out what loans are the best to get, and all the time, effort, and mathematical skill required is not so scary. It gives me peace of mind that when I am ready to purchase a home I will know exactly what to do and which resources I can go to. Knowledge is power and with such a big purchase you should figure out things beforehand so you get the best deals and know exactly what to expect so you don't come across something unexpected and possibly embarrassing or disheartening in the future. Another new idea that I came across was how the term of a loan and your interest rate make such a huge difference in the purchase of a home. Sometimes you just need to do the calculations yourself to realize how much actual investment is in your investment. and how much ROI you are really getting out of it. This information is not only short term knowledge, it should be a realization and best practice in your everyday wealth building and activities. When you know the numbers it gives your life like your house a foundation and stability. Alexandria Vigil

6. My results were about the same. I would end up paying more money per month on a 15-year loan but I would save $77,000 in interest. With a 30-year loan, I would pay less per month but then you would end up paying on it 15-years longer and spending more money on interest. • Conclusions: Renting a home instead of buying a home may be a good option for you but it depends on many factors. If the monthly payments are less for renting then purchasing a home, it might be better financially to rent. It you would prefer to own you own home, can afford the payments, and don’t want to deal with a landlord, it might be better to purchase a home instead. Purchasing a home could also be considered an investment while renting could not. Renting would not be a good option for me. • Insights: I had a general idea that you would end up paying more money on a 30-year loan, but I did not know that monthly payments are more on a 15-year loan. That means in order to pay less overall, you have to make more money to be able to afford the bigger payments. I really wouldn't want a 30-year loan, but that might be some home buyers only option. Tyler Buchanan

7. Her monthly income would be $2,500 a month starting and would be able to make a $25,000 down payment after saving up for a few years while currently living with her parents • Insights: I'm so glad that we got to do this project because it gives me a better idea on the details of purchasing a home (which for the most part I had no clue about.) It seems that many math formulas that we learn will not become useful to us in our future lives. I'm happy to work on something that we can apply later on and I think the education board should apply more of these types of projects in our curriculum. • Conclusions: The longer the loan you get, the more interest rate you'll have to pay to the total amount for the house. For the 30 year loan the monthly payments may be lower, but in the long run it'll end up being more expensive due to the higher interest rates overall. I could see how someone would choose the 30 year loan because of the lower monthly payments compared to the 15 year loan, but I would rather not deal with the extra cost overall by purchasing a cheaper home. • For a 15 year loan The loan will be shorter in time length, since you pay it off earlier than planned. This will cut down the extra interest rate that you would of had if you did not make any extra payments. Stephanie Van Wyngaarden

8. Summary of results: Interest rate effects the total payment amount because depending on how long interest is building up, the higher the total amount becomes. The longer the period of time for the loan is, the more it will cost in the end; interest adds up quickly. If you have a lot of monthly payments due each month, a 30 year loan, with lower monthly payments would be a better option. If you are able to afford the monthly payments of a 15 year loan and can still pay your monthly expenses, that would be the best option because you are paying a significantly lower total amount. Conclusions: Given the information I have provided about the 30 and 15 year loan options, I would much rather do a 15 year loan one. I would only be paying about $860 more per month, if I went with the 15 year loan option over the 30 year one, and I could pay the loan off in half the time and pay about $197,511.80 less for the total amount. That is a huge amount that could go towards many other useful expenses. However, if it was the case that I had many monthly expenses to pay for, the 30 year loan option would be more convenient because the monthly amount would not be as high so the extra money could go towards those needs. Insights: I think this assignment helped me out in more ways than one. I am actually planning on buying a house with my boyfriend very soon and using all this information I learned can really help me out so we don’t end up in trouble. I think anyone, at some point in their life, will end up buying a home, so this can help ensure that the decisions they make will be the right ones. We learned this in class because not only does it have to do with math, it will help out our future in buying a home. I am very appreciative of this project. The total amount that would be paid for a 30 year loan, including the down payment, is $749,336.67 with a total interest amount of $299,435.67. For a 15 year loan, the total amount is $551,824.87 with a total interest amount of $101,924.8. The payments each month for a 30 year loan would be about $1,962.33. The payments each month for a 15 year loan would be about $2,820.64. Mckayla Newman

9. PROS CONS High startup cost If you do decide to move, selling your house can take a long time. Sometimes you can even lose money on it. Higher monthly payments. • You are the owner. You aren’t just throwing your money away to just live there. • You can do renovations that you might not be able to if you were renting. • There are many tax cuts you get if you own your own home. Buying a house

10. PROS CONS • If your career has uncertainty with location, you are able to move a lot easier if needed to. • If maintenance issues in your house occur, your landlord is usually the one that would fix it rather than doing it yourself or paying someone else a lot to do it. • There is a lower start up cost. You don’t have to pay a huge down payment that you normally would when buying a house. • Decor options are usually very limited and so you cannot set your home up as you wanted to • Prices are often fluctuating and you do have no control over it • May have certain restrictions with pets Renting a house

11. Conclusions and Thoughts on group members work and insights created during the completion of part 3

12. As a group, we decided that learning about the logistics of purchasing a home will have a positive effect on our future. Growing up many of us believed that math was pointless and we would never utilize it in our lives; however it is assignments like this one that helps is to recognize that this is not the case. We are all appreciative of this project because these techniques can be applied when purchasing a home and therefore be used for the rest of our lives. The group is in agreement that we came to similar conclusions provided the metrics for the assignment; and most of us agree that we would go for the 15-year loan to avoid the huge amount of interest that ends up being paid. However we can see the flexibility that comes with the 30-year loan that would allow you to invest in other areas. All in all to put a little extra cash in our pockets we plan to go with the loan that has the most minimal interest rate with the shortest term of the loan to avoid any extra payments besides the additional monthly payments that we will choose to make. The additional monthly payments have you spending more to pay less and we all want to pay less. knsfinancial.com