# Brent's Dream House

## Brent's New House

Brent just moved into the city of Overland Park, KS. He loves his job as a construction foreman and he hopes to settle down soon so he is buying a new house. This three story house is priced at \$424,000 and contains 4 bedrooms and 4 and a half baths. The house has a beautiful newly renovated kitchen, a gorgeous patio, and a huge living room. It has a big finished basement that Brent can use to entertain because he loves having people over. The house is currently listed with Reese & Nichlos and can be finance with a rate with Bank of America.

## Brent can afford \$2200 per month for his home.

Brent makes \$60,000 a year as a construction foreman. When 30% is subtracted for taxes Brent makes \$42,000 a year. When that number is divided by twelve, Brent's monthly income is \$3500.

## Brent's other monthly expenses

Brent also has to take into account the other things he spends his money on each month:

-\$450 for his car

-\$300 for food

-\$300 for food

-\$300 for insurance

-\$250 for entertainment

After these expenses are all subtracted from his monthly income of \$3500, Brent has \$2200 to spend on a home.

With a loan from Bank of America at a rate of 4.625% and \$2200 monthly payments, Brent found that he can afford a loan of up to \$427899.42.

## Minimum Payment

Although Brent has the ability to pay \$2200 per month for his home, the home he purchased was under his budget. Because the house he bought had a \$424,000 loan at a monthly 30 year-fixed rate of 4.625%, Brent really only has to pay \$2179.95 per month.

## Increased Principle

If Brent were to increase his monthly payments by 15% per month, Brent would have the ability to pay \$2530 each month. In order to pay off his loan of \$427899.42, Brent would be paying \$2530 each month for 22.85775 years instead of \$2200 for 30 years.

## The Difference

If Brent were to pay \$2200 per month for 30 years, he would end up paying a total of \$792,000 for his home. That is nearly double the value of the home.

(\$2200/month x 12 months/year x 30 years = \$792,000)

If Brent were to pay 15% more than his current monthly payment, not only would it only take him 22.85775 months instead of 30, but he would only end up paying a total of \$693961.29.

(\$2530/month x 12 months/year x 22.85775 years = \$693961.29)

If Brent paid 15% more each month, he would end up saving a whopping sum of \$98,038.71.