MATH 101
Project 2
Form F
Part 1: Mortgages
You have found your dream house and wish to purchase it. The house sells for $295,000 and
you will need to put 10% down. The deal you can get is for 2 points, $400 in additional
closing costs, and an interest rate of 6 3/4%. Answer the following questions (you must show
ALL work in order to receive ANY credit):
1. How much money do you need at closing?
2. What is your monthly payment for a 15-year mortgage?
3. How much do you pay to the bank in interest alone for the 15 year loan?
4. What is your monthly payment for a 30-year mortgage?
5. How much do you pay to the bank in interest alone for the 30 year loan?
6. If you were to pay an extra $20 per month for the duration of the 30-year mortgage,
you would pay it off in 347 months. How much would you save in interest should you
choose to do this?
Part 2: Credit Cards
You just received your latest credit card bill. The total balance was $2850 and the interest
rate is 17%. Your credit card company computes your minimum payment by figuring 1/30 of
the balance. Assuming you stop using the credit card and make only the minimum monthly
payments, answer the following questions:
1. How long will it take you to pay off the credit card?
2. What will your balance be after 5 years of minimum payments?
3. If you pay $100 more than the minimum payment each month, how much will you pay
in interest alone?
4. If you were to take out a 5 year loan at 17% compounded monthly instead, how much
would the debt of $1850 cost you?
