Honors Precalc Finance Project
Lindsey Spillar, hour 7
~After taking 30% of taxes out of his annual salary, Brent's salary comes to $42,000. Then by dividing this by 12 (months) he has a monthly income of $3,500. However, since his car payment is $450 each month, his monthly total is $3050.
~Since a morgage is between 25-30% of ones monthly income, taking 25% out of $3050 comes to a minimum monthly payment of $762.50 for Brent to pay for a house each month. This way, he will have a little over 75% of his income for his other spending needs.
Interest rate for a 30 year fixed rate loan from Bank of America - 4.625%
Equation used to find how much total Brent can afford to borrow
- Brent's total cost that he can afford to borrrow is (PV=) $148,306.05
- Located at 5817 W 101st Place Overland Park, KS 66207
- List Price: $179,900, but with a down payment of $35,980
- After subtracting the down payment, Brent's house is $143,920
- With the interest rate of 4.625%,and a term of 30 years monthly, his monthly payment is $739.95
If Brent were to increase his minimum monthly payment by 15%, his monthly payment would be $850.94. Instead of 30 years, it would only take 22 years and 10 months which would save him 7 years and 2 months to pay off his loan. Subtracting the initial payment from the increased by 15% payment, Brent would save $32,977.67.
(2014, January 1). RE/MAX. http://www.remax-midstates.com/Home/5817-W-101st-Place-Overland-Park-KS-66207/HRT/1858586/.