# Pre-Calc Finance Project

## Scenario

Brent is a construction foreman who did not attend college. He is 24 years old, and earns an annual salary of \$60,000. He has a car payment of \$450.00 each month. He wants to buy his first home in the next few months.

## Monthly Amount

Annual Salary-\$60,000

After Taxes-\$42,000 (Including Fed, SS, Medi, and State)

Monthly Income-\$3500

Monthly Expenses:

• Car Payment-\$450 (12.86%)
• Food-\$350 (10%)
• Savings-\$350 (10%)
• Clothing-\$175 (5%)
• Entertainment-\$175 (5%)
• Personal Expenses-\$175 (5%)

Total Expenses per Month-\$1675

Net Monthly Income-\$1825

## Total Amount

After consulting with an advisor of zillow.com, Brent found his maximum budget for his house was \$282,659 and at most can afford a regular monthly payment of \$1825.

## House Mortgage and Bank of Blue Valley

After finding his budget for his new house, Brent began to look for houses on zillow.com. He found his dream house at 10524 Mohawk Ln, Leawood, KS 66206. With a list price of 239,900. Unfortunately, he wasn't able to pay for the house with his own money so he had to take out a mortgage. Brent went to Bank of Blue Valley. He applies for a 30 year fixed rate loan at 4.375%(as of 12/17/13 at 1:50 PM ET). After using the present value (PV) formula, Brent found that his minimum monthly payment would be \$1197.79, under his net monthly income of \$1825.

## Increased Principle

If Brent decides to increase his monthly payments by 15% from \$1197.79, his new monthly payment will be \$1377.46. By increasing his payment, he will save 6.92 years, paying off his mortgage in 23.08 years. As a result, he will save \$49,703.08 by increasing his monthly payment only 15% per month!

## References

10524 Mohawk Ln, Leawood, KS 66206 is For Sale - Zillow. (n.d.). Retrieved from