# UIC Down Payment Math Problem

Question Description

I need an explanation for this Mathematics question to help me study.

You will have to search for your dream house, calculate the down payment, and the monthly payments for a 30 and 15 years fixed loan. You will use the loan payment formula to determine your monthly payments for a 30-year fixed loan with an APR of 3.75% and for a 15-years fix loan with an APR of 2.97% with a down payment of 5%. You will make a decision on which loan you would take and provide reasons for your choice based on comparing the monthly payment amounts and the total interest paid amounts.Grading Scale:2 points- property value with address5 points – down payment amount and the value of the loan5 points – monthly payments for 30 and 15 years3 points – conclusion5 points – reply to at least two other classmates’ posts

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Tue Jul 14 6:06:29 PM
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Module 4 discussion – Summer 2020 MATH 144 WW1 HW
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SOLUTION: Easy Math Problem – Mathematics Homework Help – Studypool
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Osama Munawar posted Jun 30, 2020 5:32 PM * Subscribe
The formula for calculating loan is:
Loan Payment (P) = Amount (A) /Discount Factor (D)
PODOBIJO CO@@ @ @ @ OTXET
D = {[(1 + r)n] – 1} / [r(1 + r)n]
Where: n=number of payment periods, r= periodic interest rate, A= total amount, and D= discount factor
30-year fix loan (n) = 30 x 12 = 360 months at an interest rate of 3.75% (0.0375), while r=0.0375
divided by 12 months a year (0.003125)
5-year fix loan (n) = 15 x 12 = 180 months at an interest rate of 2.97% (0.0297), while r = 0.0297 divided
by 12 months a year (0.002475)
Downpayment for both cases = 5% of 100,000 = (5000) Leaves each case with a debt of 95,000 USD
The 30-year plan would cost USD 439 per month which would translate to a total of {(439*360)+5000) =
163,040 USD
The 15-year plan would cost USD 646 per month which would translate to a total of {(64*180)+5000) =
121,280 USD
The difference would be that the 30-year plan would cost more by USD 41,760 making it quite expensive
despite it giving relatively cheaper repayment installments.
In my case, I would prefer the 15-year repayment plan.
The address of the home is 4857 Us Highway 231 S, Beaver Dam, KY 42320 (zillow.com)
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SOLUTION: Easy Math Problem – Mathematics Homework Help – Studypool
Module 4 discussion – Summer 2020 MATH 144 WW1 HW
+
My Dream House from Zillow: 415 E North Water St, Chicago, IL 60611
Value: \$8,990,000
Down Payment: \$8,990,000 x 5% = \$449,500
Value of the Loan: \$8,540,500
Payment for 30 Years
• Rate per Period: 0.0375 / 12 Months = 0.003125
• Number of Periods: 30 x 12 = 360
• PV: \$8,540,500
• Monthly Payment: 8540500=C/.003125)*(1-(1/1.0031254360)) = \$39,522.40
• Payment for 30 Years: \$39,522.40 x 360 = \$14,228,064
Payment for 15 Years
• Rate per Period: 0.0297/ 12 Months = 0.002475
• Number of Periods: 15 x 12 = 180
• PV: \$8,540,500
• Monthly Payment: 8,540,500=C/.002475)*(1-(1/1.0024754180)) = \$58,856
Payment for 15 Years: \$58,856 x 180 = \$10,594,080
In conclusion, I would chose the 15 Year Loan and attempt to pay it off over a shorter period of time and
with a lower interest rate.

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